12 Month Non-Solicitation Period for Insurance Brokers Confirmed
Lengthy non-solicitation periods contained in employment contracts may hold water following a recent UK court decision in which the court found in favour of the employer insurance brokers against its employee. The court enforced a twelve month non-solicitation period post-termination of employment in respect of certain clients of the firm. Given that UK judgements are considered persuasive in Irish courts, the decision is likely to have a mirrored impact on the insurance industry in Ireland.
The case in question is Romero Insurance Brokers Limited v Templeton  EWHC 1198. The case concerned a restrictive covenant in Templeton's employment contract with the firm which prohibited him, for a period of twelve months, from soliciting or doing business with clients he had dealt with up to six months before he finished working for the firm. Templeton had commenced employment at another insurance company the day after he finished at Romero and had brought a number of ex-clients of the firm with him.
Employers have to be very careful when drafting such restrictive covenants as their enforceability is linked to what is considered reasonable and the courts have on a number of occasions made changes to such covenants to be more limited in time, space or subject matter. The degree of protection they afford to the employer should only be what is reasonably necessary in the circumstances. In the Romero case, weight was given to the fact that insurance contracts generally have twelve month renewal cycles. As such, the court found that a once yearly opportunity to establish meaningful client contact applied here. Due to this particular characteristic, insurance contracts could contain appropriately worded twelve month restrictions on client solicitation. Employees were granted some comfort in the court stating that anything longer however would be considered excessive.