Background
Huws Gray Limited (HGL), one of the UK’s largest independent builders merchants with over 250 branches and 4,300 employees, employed Daniel Gentleman (DG) as an Area Sales Manager from October 2023. Based in Swindon, DG managed customer relationships for HGL’s Swindon, Newbury, and Cirencester branches. His contract of employment, dated 16 October 2023, contained a six-month post-termination non-compete covenant (the Covenant) prohibiting him from engaging with any competing builders merchant business located within 20 miles of those branches, along with confidentiality obligations and a contact-details deletion clause.
In November 2025 DG gave one month’s notice, informing his line manager he was leaving to join MKM Building Supplies Ltd — a direct competitor — as an external sales representative for MKM’s forthcoming Swindon branch. HGL placed him on garden leave from 27 November 2025, which reduced the Covenant’s duration accordingly. DG started work for MKM on 6 January 2026, some weeks before MKM’s Swindon branch opened on 2 March 2026. HGL subsequently became aware that former customers had reportedly been contacted by DG on MKM’s behalf, and pointed to a LinkedIn post in which DG directed a former HGL customer to send quotes requests to an MKM colleague.
After pre-action correspondence failed to secure undertakings, HGL issued an application for injunctive relief. On 25 February 2026 HHJ Matthews granted an interim injunction and directed an expedited trial, applying the Lansing Linde modification to American Cyanamid given the risk that interim relief would substantially pre-empt the outcome. Trial took place on 13–15 May 2026. Critically, the Covenant was due to expire on 27 May 2026 — twelve days into the trial — meaning no judgment on whether to continue the Covenant-based injunction could realistically be delivered before its natural expiry. The draft judgment was circulated on 1 June 2026 and handed down on 17 June 2026.
The Court’s Holding
The court, per HHJ Russen KC sitting as a High Court judge, addressed two remaining live questions: first, whether HGL had been entitled during the Covenant’s currency to hold DG to its terms (the Covenant having lapsed on 27 May 2026 before judgment was given); and second, whether the interim injunction restraining misuse of HGL’s confidential information should be made final. Applying the four-stage framework set out in TFS Derivatives Ltd v Morgan [2004] EWHC 3181 (QB) — construction, legitimate protectable interests, reasonable necessity, and discretion — the court subjected the Covenant to careful scrutiny.
On construction, HGL proposed blue-pencilling the phrase “or interested” (following the Supreme Court’s guidance in Tillman v Egon Zehnder Ltd [2019] UKSC 32) and treating the second paragraph of the Covenant (the “Carve-Out”) as a stand-alone qualification. The court accepted that blue-pencilling of discrete phrases in accordance with Tillman forms part of legitimate contractual interpretation, but the exercise cannot rescue a covenant that remains unreasonably broad after severance. The judge noted that a non-solicitation and non-dealing provision in the same clause, which would have offered targeted and proportionate protection, was rendered meaningless because the contract failed to define the terms “Restricted Customer” and “Restricted Potential Customer.” Applying the principle from Office Angels Ltd v Rainer Thomas [1991] IRLR 214, the existence of an (albeit ineffective) non-solicitation mechanism was held to be relevant to the reasonableness assessment: HGL could not maintain that only a broad area-wide non-compete would adequately protect its interests when a less far-reaching alternative had been expressly contemplated in the same contract.
On the confidential information claim, DG accepted the express confidentiality obligation at clause 19 and an equitable duty of confidence, but denied retaining or misusing any of HGL’s confidential information or possessing it in a form capable of misuse. He also denied having solicited former customers. The court’s conclusions on these disputed factual issues, and its final orders on injunctive relief, are set out in the full judgment.
Key Takeaways
- Area-based non-compete covenants in employment contracts face “very rigorous and careful scrutiny” and the burden lies squarely on the employer to demonstrate the restriction is no wider than reasonably necessary to protect a legitimate proprietary interest.
- Where the same contract includes a non-solicitation or non-dealing clause — even one rendered ineffective by poor drafting — its presence can be evidence that more targeted protection was available, undermining the employer’s case that only a sweeping non-compete would suffice.
- Blue-pencilling under Tillman v Egon Zehnder is a legitimate part of contractual interpretation, but severance of offending phrases cannot save a covenant that remains fundamentally overbroad once the pencil has been applied.
- In expedited trials where interim relief substantially pre-empts the main remedy, the Lansing Linde modification allows the court to assess the claimant’s likely prospects of success rather than applying American Cyanamid in its conventional form.
- Where a non-compete covenant expires before judgment is delivered, the court must still adjudicate on historical enforceability and any surviving heads of relief — such as confidential information injunctions — which retain ongoing relevance.
Why It Matters
This decision is a significant contribution to the body of case law on post-termination non-compete covenants in UK employment contracts. It reinforces that courts will look holistically at the contractual suite of protections available to an employer: where a non-solicitation clause — even a badly drafted one — signals that the employer itself envisaged targeted relief, that same employer will struggle to justify a blunt area-wide non-compete as the only adequate safeguard. The judgment also provides practical guidance on the interplay between blue-pencilling and the reasonableness inquiry in the wake of the Supreme Court’s decision in Tillman v Egon Zehnder.
For practitioners drafting employment contracts in the builders merchant sector — or any business reliant on field-based sales staff with strong customer relationships — the case is a cautionary reminder that post-termination restriction clauses must be carefully tailored: undefined terms in a non-solicitation clause and overly broad geographic non-competes can together leave an employer with significantly weaker protection than a well-drafted, targeted covenant would have provided.