Introduction
This essay provides a case comment on *Tillman v Egon Zehnder Ltd [2019] UKSC 32*, a landmark decision by the UK Supreme Court, with a specific focus on its implications for contract law, particularly the doctrine of severability in the context of restrictive covenants. Aimed at first-year law students studying contracts, this analysis seeks to elucidate the legal principles underpinning the case, the Court’s reasoning on severability, and the broader effects on employment contracts. Additionally, this essay draws comparative insights from the Indian legal context to highlight varying approaches to restrictive covenants. The discussion is structured into sections addressing the factual background and legal issues of the case, the Supreme Court’s decision on severability, its impact on restrictive covenants, and a comparative perspective from India, before concluding with a summary of key arguments and their implications.
Background and Legal Issues in Tillman v Egon Zehnder Ltd
The case of *Tillman v Egon Zehnder Ltd [2019] UKSC 32* arose from a dispute between Mary Caroline Tillman, a former employee of Egon Zehnder Ltd, a global recruitment firm, and her employer. Tillman, who held a senior position, resigned in 2017 to join a competitor. Her employment contract contained a restrictive covenant prohibiting her from engaging in any competing business or being “concerned or interested in” such a business for six months post-employment. Egon Zehnder sought an injunction to enforce this clause, arguing that Tillman’s new role breached the covenant. Tillman, however, contended that the restriction was unenforceable as it was unreasonably wide, particularly the phrase “interested in,” which could theoretically bar her from holding even minor shares in a competing entity.
The central legal issue was whether the restrictive covenant was void for being in restraint of trade—a principle rooted in contract law that deems such clauses unenforceable unless they are reasonable in scope, duration, and public interest (Treitel, 2015). A secondary but critical issue was whether, if the clause was found to be unreasonably broad, the offending part could be severed, leaving the remainder of the covenant enforceable. This brought the doctrine of severability to the forefront, a concept that allows courts to strike out unenforceable parts of a contract while preserving the rest, provided certain conditions are met.
The Supreme Court’s Decision on Severability
The UK Supreme Court, in a unanimous decision delivered by Lord Wilson, held that the restrictive covenant in Tillman’s contract was partially unenforceable due to the phrase “interested in,” which was deemed too broad. However, the Court crucially ruled that this problematic term could be severed, thereby upholding the remainder of the clause. The decision revisited and clarified the test for severability originally established in *Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613*. The test requires that: (1) the unenforceable provision can be removed without needing to add or modify the remaining wording (the “blue pencil” test); (2) the remaining terms are supported by adequate consideration; and (3) severance does not fundamentally alter the character of the contract.
In applying this test, the Supreme Court found that deleting “interested in” satisfied the “blue pencil” criterion, as it did not necessitate rewording the rest of the clause. Furthermore, the remaining restrictions were supported by the original consideration (Tillman’s salary and benefits), and severance did not change the fundamental nature of the covenant, which was to protect Egon Zehnder’s legitimate interests, such as client relationships and confidential information (Tillman v Egon Zehnder Ltd [2019] UKSC 32). This ruling marked a significant departure from earlier, more restrictive approaches to severance, arguably demonstrating a more pragmatic stance by the judiciary towards preserving contractual intentions where possible.
Impact on Restrictive Covenants in Contract Law
The decision in *Tillman v Egon Zehnder Ltd* has profound implications for the drafting and enforcement of restrictive covenants in employment contracts. Firstly, it reaffirms the courts’ willingness to intervene and salvage contractual provisions through severance, provided the legal criteria are met. This offers employers greater confidence that a poorly worded clause may not render an entire covenant void, thereby protecting legitimate business interests. However, it also places a burden on employers to draft clauses with precision, as overly broad terms risk being struck out, potentially weakening intended protections.
For employees, the case highlights the importance of challenging unreasonable restraints, as the judiciary remains vigilant in balancing individual freedom to work against employer interests. Indeed, the ruling ensures that employees are not unduly restricted by covenants that overreach legitimate business needs. Nevertheless, the liberal application of severance in this case may limit the scope for employees to escape restrictive covenants entirely, as courts can now more readily uphold modified versions of such clauses.
From a broader contract law perspective, the case underscores the dynamic role of severability as a tool for upholding contractual intent without compromising fairness. For first-year law students, it serves as a practical example of how abstract doctrines like restraint of trade and severability operate within real-world disputes, illustrating the judiciary’s role in interpreting and, where necessary, reforming contractual agreements (Adams and Brownsword, 2020).
Comparative Insights from the Indian Context
To enrich this discussion, it is instructive to consider how restrictive covenants and severability are approached in India, where contract law is governed by the Indian Contract Act 1872. Under Section 27 of the Act, agreements in restraint of trade are generally void, with exceptions for agreements made during the sale of goodwill or for employment contracts that are reasonable in scope. Indian courts have historically taken a stricter view than their UK counterparts, often refusing to sever unreasonable portions of restrictive covenants. For instance, in *Niranjan Shankar Golikari v Century Spinning and Manufacturing Co Ltd (1967) 2 SCR 378*, the Supreme Court of India held that a post-employment restraint must be strictly necessary to protect employer interests and cannot be partially enforced if found unreasonable.
Unlike the UK approach in Tillman, Indian jurisprudence rarely applies the “blue pencil” test to salvage covenants, reflecting a stronger emphasis on employee autonomy. This contrast highlights a limitation in the Indian context, where employers may struggle to enforce even well-intentioned restrictions if any part is deemed unreasonable. For students, this comparison underscores how cultural and legal priorities—whether favoring business protection (as in the UK) or individual freedom (as in India)—shape the application of contract law principles like severability.
Conclusion
In summary, *Tillman v Egon Zehnder Ltd [2019] UKSC 32* represents a pivotal moment in UK contract law, particularly concerning the doctrine of severability and its application to restrictive covenants. The Supreme Court’s decision to sever an overly broad term while upholding the remainder of the clause demonstrates a pragmatic approach to balancing employer and employee interests, offering clearer guidance on the enforceability of such provisions. For first-year law students, the case illustrates the practical interplay of legal doctrines like restraint of trade and severability in employment contracts. Comparative insights from India further reveal how differing legal frameworks influence the treatment of similar issues, highlighting both the relevance and limitations of severance as a tool. Ultimately, this ruling encourages precision in contractual drafting and reinforces the judiciary’s role in ensuring fairness, with lasting implications for how restrictive covenants are constructed and contested in the UK.
References
- Adams, J.N. and Brownsword, R. (2020) Understanding Contract Law. 6th edn. London: Sweet & Maxwell.
- Treitel, G.H. (2015) The Law of Contract. 14th edn. London: Sweet & Maxwell.
- Tillman v Egon Zehnder Ltd [2019] UKSC 32. Available at: https://www.supremecourt.uk/cases/docs/uksc-2017-0100-judgment.pdf.
