The recent High Court case of Octavio Hernandez v Vodafone Ireland Ltd, [2013] IEHC 70 raises interesting issues in respect of the enforceability of non-compete clauses in employment contracts. This case also develops the law on employment injunctions and whether damages are an adequate remedy for an employee.

The plaintiff successfully applied for an interlocutory injunction to prohibit his former employer, Vodafone Ireland Ltd (“Vodafone”), from restraining him commencing his new employment with its competitor, Telefonica Ireland Ltd (“O2”). This case is unusual in that it was brought by a former employee who is the subject of a non-compete clause, rather than his former employer. 

The key issue was a non-compete clause in the plaintiff’s contract of employment with Vodafone which restricted him from working for a competitor company within six months from the termination of employment. If this non-compete clause was enforced it would prevent the plaintiff from commencing employment until 1 May 2013 with the loss of over three months' salary. 

Laffoy J in considering the matter took into consideration that the plaintiff was married with two children and that the enforcement of this non-compete clause would leave him without an income to meet his and his family’s needs and she regarded Vodafone’s attempt to enforce this restriction as "utterly naïve". 

Laffoy J was satisfied that Mr Hernandez had established a fair issue to be tried and interestingly noted that the fact that Mr Hernandez was aware of the non-compete clause in the contract of employment would be "immaterial" in determining whether the clause is enforceable.

In the court’s view, Vodafone did not make the case that damages would not be an adequate remedy, if an injunction was granted, and it was to transpire subsequently that the non-compete clause was valid and enforceable. In circumstances where the plaintiff undertook to be bound by his non-solicit clause and confidentiality clause with Vodafone, Laffoy J concluded that Vodafone "should have ample protection” by reason of that undertaking and his undertaking as to damages. 

This decision is a clear departure from previous decisions, such as Orr v Zomax [2004] where, having concluded that there was no fair question to be tried that would justify granting an injunction, Carroll J went on to find that even if such a fair question was deemed to exist, in the circumstances an award of damages at the trial if the applicant was successful would still be an adequate remedy if the applicant was not reinstated in their position. 

The Hernandez decision also appears to depart from Laffoy J's earlier decision in Maha Lingam v Health Services Executive [2005], where the plaintiff had to demonstrate that there was a "strong case that he will suffer irreparable loss, both financial and reputational" to conclude that damages would not be an adequate remedy. In the Hernandez case, Laffoy J accepted the plaintiff’s argument that it was of crucial importance that he had a continuing income stream to support him and his family despite the fact that the quantum of the plaintiff’s estimated loss was less than €20,000. 

Laffoy J went on to find that the balance of convenience lay in granting the injunction due to the situation Vodafone Ireland Ltd had created for Mr Hernandez which was distressful to him and his family. The plaintiff was therefore found to have satisfied the criteria for the granting of an injunction. 

Although the substantive issue of whether the non-compete clause in the contract of employment is enforceable has yet to be tried it appears, from the fact that the High Court granted the interlocutory injunction, that an employer’s ability to rely on a non-compete clause in a contract of employment may have weakened.