Restrictive covenants: 12 month non-compete covenant enforceable after words were severed from the covenant

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Restrictive covenants: 12 month non-compete covenant enforceable after words were severed from the covenant

Published 16 May 2023

The Court of Appeal has upheld a High Court decision that words in a non-compete covenant could be severed from the clause with the result that a 12 month non-compete clause was enforceable


NZP Limited produces bile acid derivatives for use in the pharmaceutical industry, and is part of a group company working in this niche sector.  Dr Boydell was employed by NZP in a senior role and was responsible for global sales and marketing for the group.  As part of his role, he worked closely with the group’s main customers and had close knowledge of trade secrets and confidential information belonging to the group.  His contract of employment contained a suite of post termination restrictions including a 12 month non-compete clause.

Dr Boydell resigned, telling NZP that he intended to join NZP’s main competitor.  NZP applied to the High Court for an injunction to enforce a 12 month non-compete clause in Dr Boydell’s employment contract.   This clause prevented him from being involved in any activity for the benefit of any third party that carried out any business which would compete with the business of NZP or any other company in the group. He was to be paid 100% of his last gross annual salary, bonuses and benefits for the duration of the non-compete in quarterly consecutive equal instalments.

Dr Boydell argued that the non-compete clause was drafted too widely and was therefore not enforceable because it was an unfair restraint on trade. 

Severance prevents the invalidity of the entire clause and allows a Judge, in certain circumstances, to sever or delete wording from a contract leaving the remaining terms of the contract in force (the “blue pencil test”). The High Court used severance in this case and severed the wording in the covenant relating to working for competitors of NZP's group companies. On this basis the High Court, granted an interim injunction upholding the non-compete clause.

Dr Boydell appealed unsuccessfully to the Court of Appeal.  He argued that:

  • as drafted, the covenants would prevent him from working at any company which produced general pharmaceutical products, including nasal sprays. This would include companies such as Boots and Superdrug. This, he said, went beyond what was necessary to protect NZPs legitimate interests. The Court dismissed this argument, holding that this construction was clearly not within the contemplation of the parties when the contract was signed.
  • severing the group company wording significantly changed the nature of the restraint, and that this went contrary to established case law. However, the Court held that the wording that had been severed was peripheral and its deletion did not significantly change the nature of the restraint.  The covenant was clearly focussed on NZP’s specialist activities, and the severance of the wording relating to the wider group had not been a rewrite of the covenant. 
  • even after severance, the clause was too wide to be enforceable. The Court of Appeal also disagreed with this argument. The clause was wide but, in the circumstances specific to this case – that NZP operated in a very niche area, as did the competitor for whom he intended to work - it was reasonable to enforce a widely drafted non-compete covenant.  Dr Boydell would be taking up a senior role with the competitor and it was unrealistic to insulate him from competitive activity in these circumstances. 


It is relatively unusual for courts to enforce 12 month non-compete covenants. Here, it was relevant that Dr Boydell was very senior, that he worked in a niche business, and that he had significant access to important trade secrets and confidential information. The Court noted that if NZP were a larger public company operating across different business fields, the situation would likely be different and a wide non-compete may be difficult to justify in that scenario. This comment underlines that  determining the scope and enforceability of non-compete clauses is highly fact sensitive. Employers who wish their restrictive covenants to be enforceable need to tailor them to the employee’s skills and their role, the restrictions must go no further than protecting the employer’s legitimate business interests. 

Alan James Boydell v (1) NZP Limited; (2) Alice (Luxembourg) Midco S.A.R.L


Hilary Larter

Hilary Larter


+44 (0)113 251 4710

Ceri Fuller

Ceri Fuller

London - Walbrook

+44 (0)20 7894 6583

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