Post-termination restrictive covenants in Ireland – An update (Sponsored)

Apr 21, 2020

Post-termination restrictive covenants are included in employment contracts in a wide variety of sectors, including accounting and other professional services. The general rule in Ireland in respect of restrictive covenants is that they are quite difficult to enforce, particularly having regard to the constitutional right to earn a livelihood. The recent case of Ryanair v Bellew1 [2019] IEHC 907 highlighted the attention to detail that must be adopted by employers when drafting restrictive covenants.

What are restrictive covenants?

If an employee occupies a position which, were they to leave to work for a competitor or set up in competition themselves, could cause damage to the company’s legitimate business interests, then it may be appropriate for an employer to include post-termination restrictions. Typically, restrictive covenants fall under two distinct categories:

  • ‘non-compete clauses’ seek to prevent the employee from working for a business in direct competition with their former employer; and
  • ‘non-solicitation clauses’ seek to prevent an employee from soliciting clients, customers or co-workers from their former employer.

To be deemed a reasonable restriction, the employer must show the following:

  • that it has a legitimate business interest to protect (including “goodwill”2);
  • that the restrictions go no further than is necessary to protect this business interest; and
  • that they are not contrary to public policy.

As a rule, such restrictions need to be narrowly defined in terms of the scope of the business protected, the duration of the restriction, and the geographic area covered.

Ryanair v Bellew [2019] IEHC 907

In the recent case of Ryanair v Bellew, Mr Bellew commenced employment with Ryanair as Chief Operating Officer (COO) in December 2017. The outlined terms of Mr Bellew’s contract provided that he would be subject to 12 months’ non-compete post-termination restrictions. In June 2019, Mr Bellew was provided with an “amendment to employment contract”, which stated:

“For a period of 12 months after termination of your employment, you shall not, without the prior written consent of the Company, directly or indirectly in any capacity…

(a) be employed, engaged, concerned or interested in any capacity in any business wholly or partly in competition with the Company for air passenger services in any market; or

(b) solicit or entice or endeavour to solicit or entice away from the Company any person who was employed within a senior executive, managerial or technical capacity by the Company.

If you receive an offer of employment or engagement during your employment with the Company, or before the expiry of the restriction period set out in this clause, you shall give the person or entity making the offer a copy of this clause.”

Mr Bellew subsequently left Ryanair for a COO position at EasyJet, which was due to commence on 1 January 2020. On 6 August 2019, Ryanair issued proceedings against Mr Bellew seeking (i) an order for specific performance of his contract, particularly the post-termination restrictions; and (ii) an injunction restraining Mr Bellew from joining EasyJet for a 12-month period post-termination of his employment contract with Ryanair.

After hearing arguments from both sides, the High Court accepted that, in principle, Ryanair had a legitimate interest in protecting valuable and sensitive confidential information which was commercial, operational and financial information, and the nature and extent of this confidential information to which Mr Bellew had access to would justify a restriction.

Furthermore, the High Court found no issue with the 12-month time constraint, as it was “abundantly justified by the likely useful life of confidential commercial information that would come to Mr Bellew’s knowledge.”

However, the High Court was not satisfied that there was a legitimate interest in Ryanair preventing Mr. Bellew from taking up employment at EasyJet as the restraint in the employment contract was too wide. The sensitive commercial information to which Mr. Bellew was privy to did not justify him from being prevented from taking up employment with an airline in competition with Ryanair. Had Ryanair provided further detail within the restriction clause it is possible that the Court may have accepted the purported limitation of the employee’s rights.

The High Court was also concerned with the restriction applying to alternative employment in any capacity within the airline outside management positions. The Court was not prepared to read down the clause to construe it as applying only to certain ranks or to any capacity in which Mr. Bellew had been employed by Ryanair, as this would modify the wording of the contract.

On this basis, High Court concluded that the restrictive covenant was void and unenforceable against Mr Bellew.

Key takeaways for employers

  • It is important to ensure that the contractual provisions are realistic and go no further than is reasonable/adequate to protect the employer’s legitimate business interests. Each contract, including the restrictive covenants, should be tailored to the employee, their role and level within an organisation.
  • In assessing whether the imposition of the non-compete clause is justifiable in principle to protect the business interests of the employer, the court will assess the terms of the covenant, not the new employer’s business.
  • Careful drafting is of paramount importance at the outset. If the clause is too broad or is deemed to be unreasonable, this cannot be rectified at the enforcement stage.
  • Continuous review of employment contracts is critical, particularly on employee promotion. Even the definition of confidential information should be reviewed regularly to ensure it deals with the specific information that a senior employee will have access to.
  • If an employee is promoted, then new restrictive covenants should be entered into to reflect that new role. Blanket restrictive covenants which may be too wide when the employee first commenced employment, do not become enforceable over time as an employee is promoted.

It is also noteworthy that in the event an employee is made redundant or dismissed due to COVID-19 related reasons, post-termination restrictions will continue to remain in force. The employer may decide to waive them, but that will be at the employer’s bequest.

Bláthnaid Evans is a Partner and Head of Leman Solicitors Employment and Corporate Immigration team. The Employment Team has extensive experience in advising employers in respect of post-termination restrictions, including drafting, reviewing and negotiating restrictive covenants and confidentiality clauses for all types of employment. For more information, call 01 6393000 or visit www.leman.ie

(This article is sponsored by Leman Solicitors.)


1. Ryanair v Bellew [2019] IEHC 907.

2. Murgitroyd and Co. v Purdy [2005] 3 IR 12.