Enforceability of Post-Termination Commission Clauses: Restraint of Trade Limits in Agency Contracts

Introduction

This commentary examines the Court of Appeal’s decision in X-R Touring LLP v Javor & Anor [2025] EWCA Civ 497, handed down on 17 April 2025. The appeal arose after Kerr J struck out X-R Touring’s claim for a declaration that a post-termination commission clause was valid and enforceable. The dispute centred on Joshua Javor, a senior booking agent who left X-R to join WME in mid-2023. X-R claimed an entitlement to a share of commission on concerts that Mr Javor had “discussed, scheduled, made or contemplated” prior to termination, under clause 13 of his employment contract. The Court of Appeal was asked to review whether that clause was a restraint of trade, whether it protected any legitimate business interest, and, if it did, whether it could be read down or severed to render it reasonable.

Summary of the Judgment

By a majority (Bean LJ and Phillips LJ), the Court of Appeal allowed X-R Touring’s appeal and held that summary disposal of the commission claim was inappropriate. The majority decided that:

It was not plain and obvious that clause 13 operated as an unreasonable restraint of trade.
On its proper construction, the commission obligation appeared limited to bookings in which Mr Javor was personally involved.
Certain words—most notably “or contemplated”—could realistically be struck out by the blue-pencil severance test, without rewriting the contract.
The reasonableness of the clause, its necessity to protect X-R’s legitimate interest in securing the fruits of Mr Javor’s work, and the scope for severance should be examined at trial with full evidence of industry practice.

Moylan LJ dissented, endorsing Kerr J’s view that the clause, by requiring 100% accounting for any commission on prospective bookings (whether or not Mr Javor had knowledge or benefit), was an unreasonably wide post-termination restraint of trade and wholly unenforceable.

Analysis

Precedents Cited

The judgment draws on a well-settled body of restraint-of-trade authority:

Stenhouse Australia Ltd v Phillips [1974] AC 391 (PC): A Privy Council decision holding that a multi-year commission-clawback clause operated in restraint of trade because it obliged the ex-employee to account for half of commissions from any client for up to five years, even if the employee had no knowledge of the transaction.
Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269: Lord Wilberforce’s “trading society” test, confirming that restraints are to be judged by their practical effect and whether they fall outside normal commercial practice.
Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2021] UKSC 36: Supreme Court approval of a flexible “rule of reason” in assessing whether a covenant belongs to established categories escaping restraint-of-trade scrutiny.
Quantum Actuarial LLP v Quantum Advisory Ltd [2021] EWCA Civ 227: Carr LJ’s three-stage test—(i) is it a restraint of trade, (ii) if so, should it fall outside the doctrine, and (iii) if not, is it reasonable?
Egon Zehnder Ltd v Tillman [2019] UKSC 32: Guidance on preferring a valid construction over an invalid one if realistically available, and on applying the “blue pencil” severance approach.
Easyair Ltd v Opal Telecom [2009] EWHC 339 (Ch): Summary judgment principles emphasising that only clear questions of law or construction should be decided without trial.

Legal Reasoning

The Court of Appeal applied the following steps:

Does clause 13 amount to a restraint of trade? Kerr J had concluded it clearly did, since it deterred Mr Javor from working for any competitor with overlapping clients, by requiring him to account for 100% of commission on any booking “discussed, scheduled, made or contemplated” before leaving. Bean LJ took a different view on construction, interpreting the clause more narrowly as referring to bookings in which Javor personally participated, thereby making it unclear whether it genuinely restrained trade.
Should the covenant be excluded from the doctrine? The majority observed that post-termination commission provisions may, in some industries, form part of accepted commercial practice—especially where agency relationships and long lead times for concerts are standard. Expert industry evidence would be needed to decide if the commission clause falls within the “trading society” exception.
If engaged, is the covenant reasonable? Reasonableness turns on whether the restraint goes no further than necessary to protect a legitimate business interest. X-R’s interest lay in securing commission on concerts whose arrangements were substantially initiated by Javor during his tenure. The majority held that the extent, duration and mechanics of clause 13 could not be judged at strike-out; a trial was required to test necessity, proportionality and whether severance of “or contemplated” bookings would yield a workable, reasonable clause.
Severance (blue-pencil) test: The Court must determine if any unenforceable words can be removed without rewriting the bargain or altering its overall effect. The majority concluded that severance of “or contemplated” bookings was realistic and would not frustrate the parties’ commercial intentions.

Impact

This decision will influence drafting and enforcement of post-termination rights in agency and employment agreements:

Employers should narrowly define commission rights to bookings in which the departing agent has demonstrably participated.
General, open-ended clauses covering “contemplated” business risk being severed or held unreasonable absent clear industry custom and evidence.
Covenants of reasonable duration and scope (for example, time-limited non-dealing undertakings) remain the safer route to protect goodwill.
Court practitioners should anticipate that disputes over construction and severance of restraints will often require full evidential hearings, rather than summary disposal.

Complex Concepts Simplified

Restraint of Trade Doctrine: A public policy principle holding that contractual restraints on a person’s freedom to work or trade will be unenforceable unless they protect a legitimate interest and are reasonable in scope and duration.
Non-Solicitation vs Non-Dealing: A non-solicitation clause bars actively approaching former clients, whereas a non-dealing (or non-dealing-with) clause prohibits any direct business dealings whether or not the former employee prompted them.
Blue-Pencil Severance: The principle that a court may delete offending words from a clause (without adding new text) if removal yields a coherent, operative restraint no broader than originally negotiated.
Trading Society Test: A hard-to-define standard asking whether a restraint differs fundamentally from those commonly accepted in normal commercial transactions of that type.

Conclusion

X-R Touring LLP v Javor clarifies that post-termination commission-clawback clauses are subject to the restraint of trade doctrine and demand careful drafting. Open-ended obligations to account for 100% of any commission on bookings “contemplated” before departure risk being struck down unless employers can show a clear industry practice and a legitimate, narrowly confined interest. The decision underscores the importance of precise language, limits on scope and duration, and the availability of severance to reform overbroad covenants. Future disputes will likely require full trials to explore industry custom and evidence of necessity, rather than early strike-out or summary judgment on points of construction alone.