One situation that a non-compete clause seeks to avoid is a former employee joining a direct competitor almost immediately after termination. However, if such a clause prohibits even shareholdings in a competitor, the former employee can seize upon this overreaching effect to void the entire clause for being in unreasonable restraint of trade (even when acquiring shareholdings was never the individual’s plan).

In such situations, can the doctrine of severance aid the employer in striking out the offending portion of the restrictive covenant and leaving the remainder valid and enforceable? This was the key issue decided by the UK Supreme Court in Tillman v Egon Zehnder [2019] UKSC 32, the first employee competition case to be considered by the UK House of Lords/Supreme Court in more than a century. After adopting a refined approach to the issue of severance, which was consistent with case law and modern commercial realities, the Supreme Court held that the offending words in question should be struck out.

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