The outcome of a court battle in London over an employee who left a firm for a rival and did not work out his notice period, lawyers say, is a victory for employers against staff poaching.

The outcome of a court battle in London concerning an employee who left a firm for an alleged competitor and did not work out his notice period, his lawyers say, represents a victory for employers against staff poaching – a  highly relevant topic in wealth management.

Law firm Twenty Twenty Law hailed the result of a High Court case, brought by derivatives broker Sunrise Brokers LLP, against former employee, Michael Rodgers, as a “landmark case”. In its statement giving its account of the outcome, the law firm said that in March this year, “Rogers walked out of Sunrise’s London office without notice – having accepted a position with a competing business based in the USA despite being subject to notice and post-termination restrictions”.

Richard Salter QC, sitting as deputy judge of the Queen’s Bench Division, ruled in favour of Sunrise Brokers, according to a copy of the ruling seen by this publication.

“This is an important victory not only for employers in the financial services and beyond, but also for common sense: employees cannot force their employers to put them on garden leave and effectively be paid not to work. That is the employer’s prerogative, not the employee’s,” David Greenhalgh, founding partner of Twenty Twenty Law, said in a statement.

“Those working in the financial services should sit up and take note. In mature markets, where potential clients and high-flying employees are already locked into competitors, aggressive raids of individuals and indeed entire teams are common. This decision is good news for the employers who find themselves the victims of such raids – they cannot be held to ransom by an unscrupulous employee or competitor,” he said.

Mishcon de Reya acted for Rodgers in the case. At the time of writing, the firm had not responded to emails and calls from WealthBriefing about whether Rodgers intends to appeal the ruling.

A prominent legal expert in financial services employment law, Ronnie Fox, of Fox, a law firm, said employers will welcome the ruling, although he argued it did not set a precedent, as there had been, for example, a case in the mid-1980s over the same issue. The case, involving the media industry, was that of Evening Standard Ltd vs Henderson (November, 1986).

“Although this [Sunrise Brokers] case does not create new law, it reaffirms the principle that courts are prepared to order specific performance of notice provisions and reasonably drafted restrictions which are designed to protect an employer’s legitimate business interests,” Fox told this publication.

“Departing executives and partners often tell us that their firm will not hold them to the full notice period or that they will be placed on garden leave.  However, we are increasingly seeing firms seeking to hold their employees (and partners) to their full notice periods, the primary reason being to enable the firm to improve its chances of retaining customer or client connections during that period.  A number of firms also resent paying employees to sit in the garden whilst there is profitable work to be done,” he said.

In its account of the case, Twenty Twenty Law said that Rodgers “submitted his written notice on 16 April; ignoring the fact that he was subject to a fixed-term contract to 22 September 2014 followed by a 12 months’ notice period. Sunrise agreed to reduce his notice to six months followed by a further six-month restrictive covenant which, as per his contract, banned him from working for a competitor, but to no avail”.

The company sought an injunction to hold Rodgers to the period of notice and bind him to the restrictive covenants. The law firm said in its press release on the case that “Rogers accepted that Sunrise had nothing that would have entitled him to resign”. “Although the contract did contain a garden leave clause, this was only to be exercised at the employer’s discretion and not simply on his demand.”

According to the High Court ruling statement, deputy judge Salter: “In my judgment, an injunction requiring Mr Rodgers to obey the terms of the Contract until 16th October 2014 – at least to the extent of not working for EOX or for any similar competitor firm to Sunrise, and not contacting his former clients from Sunrise – would be an appropriate Order for me to make.”

The judge continued: “Such an Order would not mean that Mr Rodgers `would either have to go on working for his former employers or starve or be idle’. Having regard to the particular facts of this case, and bearing in mind the probable effect of such an injunction on the psychological and material need of Mr Rodgers to maintain the skill or talent, it seems to me that such an injunction would have no relevant compulsive effect, and so would not be likely to offend the statutory prohibition. Nor would such an injunction be oppressive to Mr Rodgers.

“On the contrary, Mr Rodgers himself was quite happy to confirm to Sunrise in his 16 April 2014 email that he would not start work elsewhere until September 2014. In that context, the extra month to 17 October 2014 can hardly be said to be materially compulsive on him to return to his former employer, or to be oppressive. Moreover, although Mr Rodgers naturally wishes to start work for EOX as soon as possible, the Employment Contract which he signed in early March 2014 had a start date as late as 1st January 2015. I do not accept Mr De Marco's [Rodgers’ counsel] submission that, if I made such an order enforcing the Contract during the notice period, I should (by analogy with the "garden leave" cases) require Sunrise to pay Mr Rodgers. In this case, Sunrise has not put Mr Rodgers on `garden leave’. Mr Rodgers has simply absented himself from work.”

A full version of the judge's ruling on the matter can be seen here.