Many outdoor fitness, fitness boot camp and military fitness companies utilise restrictive covenants as part of their employment strategy. Although courts typically scrutinise restrictive covenants due to their natural tendency to negatively affect employees, they will uphold them when found to be fair in the circumstances of the particular case, as demonstrated below.
In Pure International (HK) Ltd v Lo Yan Chan Kenneth HKEC 1092 the Court of First Instance considered the validity of a six-month restriction prohibiting an ex-employee from finding employment in the same activity within 1000 metres of the company’s principal location.
The employee was a fitness instructor who had been with the company since 2004 and had built a substantial reputation over the years.
The Court found that the restrictive covenant was reasonable to protect the commercial interests and goodwill of the company.
The case demonstrates that courts are likely to uphold covenants that are tailored to an employee’s role and responsibility, and that are no more than what is reasonably required to protect the legitimate interests of an employer.
A more detailed account of the case can be viewed using the link below. This covers:
- The material facts of the case;
- The decision (and reasons);
- Post-termination restrictions in Hong Kong;
- All restrictions; and
- Take away points.
See http://bootcampmilitaryfitnessinstitute.wordpress.com/human-resources/contracts/restrictive-covenants/ for further information on restrictive covenants in the UK.
Herbert Smith Freehills LLP (2013) Hong Kong High Court Considers Reasonableness of Restrictive Covenant. Hong Kong Employment e-bulletin. Available from World Wide Web: <file:///D:/Documents%20and%20Settings/AHP/Desktop/Hong%20Kong%20High%20Court%20considers%20reasonableness%20of%20restrictive%20covenant.htm> [Accessed: 05 December, 2013].
- Commercial Restrictive Covenants Enforceable: SCC (florin12345.wordpress.com)
- When is a 12 month garden leave clause reasonable? (brodies.com)
- Case of the Week – Noncompetition Agreements in Illinois – Two Years of Employment Required (gooddayillinois.com)