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ELRCPartially AllowedNot stated in the judgment· [2018] KEELRC 1059 (KLR)

Craft Silicon Limited v Niladri Sekhar Roy [2018] KEELRC 1059 (KLR)

Employment and Labour Relations Court
27 September 2018
2,605 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

The bottom line

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A Kenyan court refused to stop a former employee from working for a competitor, but did bar him from poaching his old employer's clients for one year.

What this practically means

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Executive summary

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The Claimant, a software company, moved the Employment and Labour Relations Court by Notice of Motion dated 21st May 2018 seeking temporary injunctions restraining its former employee from contacting, canvassing or soliciting the Claimant's clients, disclosing confidential information and trade secrets, and rendering services to any competing entity, pursuant to a surviving non-compete clause (clause 9) in the employment contract. The Respondent resigned in December 2017 and took up employment with Temenos East Africa as a Sales Manager. He opposed the application through grounds of opposition and a replying affidavit, contending the non-compete clause was vague, ambiguous, unreasonable and unenforceable, that no irreparable harm was shown, and that enforcement would deny him his only source of livelihood. Applying the Giella vs Cassman Brown principles, the court held that clause 9 was a restraint of trade, generally unenforceable unless reasonable, relying on Petrofina vs Martin and local authorities. The court found clause 9(c) vague and uncapped by any geographical boundaries, and declined to enforce the full non-compete provision at the interlocutory stage as it stifled the employee's right to earn a living. However, the court granted partial relief, restraining the Respondent from contacting the Claimant's customers for the one-year period since his resignation under clause 9(d), pending determination of the claim or expiry of the restraint period, whichever was shorter. Costs were awarded in the cause. Judgment delivered by Hon. Lady Justice Hellen Wasilwa on 27th September 2018.

Key legal issues

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01

Enforceability of the non-compete/restraint of trade clause in the employment contract

Holding

The clause was held to be a restraint of trade which the court declined to enforce broadly at the interlocutory stage because it was vague, uncapped geographically and stifled the Respondent's right to earn a living

Reasoning

Applying Giella vs Cassman Brown, the court considered whether a prima facie case and enforceable covenant existed. Relying on Petrofina vs Martin and local precedents, the court noted restraints of trade are presumptively unenforceable unless reasonable. Clause 9(c) barred the Respondent from any competing employment without geographical limits, which the court found oppressive and vague, making full enforcement inappropriate at the interlocutory stage.

p. 5
02

Whether to restrain the Respondent from contacting the Claimant's clients

Holding

The court allowed this relief in part, restraining the Respondent from contacting the Claimant's customers for the one-year contractual restraint period

Reasoning

While refusing the employment-wide restraint, the court found that the specific covenant in Clause 9(d) prohibiting engagement with the Claimant's clients could be preserved on an interim basis, balancing the Claimant's client relationships against the Respondent's ability to earn a living, pending hearing of the main claim or expiry of the restraint period, whichever is shorter.

p. 5
03

Whether the Respondent's current employer competes with the Claimant

Holding

The court found it could not determine the point of competition on the material before it without joining the current employer

Reasoning

The court observed that understanding whether Temenos East Africa competes with the Claimant required further evidence about the businesses and the Respondent's roles. The Respondent deponed that his current role dealing with Cloud Banking for NBFCs in the Middle East and Africa was distinct from his previous role, and the court accepted that determining competition would require dragging the current employer into court, which would be costly to both parties.

p. 5

Legal principles established

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  • Contracts in restraint of trade are generally unenforceable unless they are reasonable as between the parties and not injurious to the public interest
  • An employer cannot restrain an employee from earning a living; a non-compete clause lacking geographical definition may be unenforceable

Court orders

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  1. 1.The Respondent shall not contact the Claimant's customers in any way during the period of one year since he resigned from employment as per Clause 9(d) of the contract, pending the hearing and determination of the claim or until the period of restraint elapses, whichever is shorter
  2. 2.Costs of the application to be in the cause

Authorities

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Legislation

  • Employment and Labour Relations ActSection 12(3)(i)
  • Employment and Labour Relations Court (Procedure) Rules 2016Rules 17(1), 17(3) and 17(5)

Cases cited (4)

  • Giella vs Cassman Brown
    (1973) EA 368
  • Petrofina (Great Britain) Limited vs Martin
    (1966) Ch 146
  • Bridge International Academies Limited vs Robert Kimani Kiarie
  • Credit Reference Bureau Holding Limited vs Stephen Kunyiha
    (2017) eKLR
Jurisdiction invoked
Section 12(3)(i) of the Employment and Labour Relations Act and Rules 17(1), 17(3) and 17(5) of the Employment and Labour Relations Court (Procedure) Rules 2016

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Craft Silicon Limited v Niladri Sekhar Roy [2018] KEELRC 1059 (KLR)", Case Analysis (2018). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1059/eng@2018-09-27

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.