Ryanair claims COO Bellew knew 'from get-go' about non-compete clause in contract

Ryanair claims COO Bellew knew 'from get-go' about non-compete clause in contract
Peter Bellew

Ryanair's chief operations officer (COO) Peter Bellew "knew from the get-go" there was a clause in his contract of employment preventing him from joining a rival for a period of 12 months post his departure from the Irish airline, the High Court has heard.

The claim was made on the opening day of Ryanair's proceedings against Mr Bellew arising out of his decision earlier this year to leave the company at the end of this month and join rival airline Easyjet as its chief operating officer.

The airline's CEO Michael O'Leary in his evidence to the court said that a non-compete clause was standard in Ryanair's senior managers' contracts of employment, who the court heard are known as "Zs".

Mr O'Leary, in reply to his counsel Martin Hayden, said Zs must give six months' notice and cannot work for a rival airline for 12 months post-termination as part of their contract of employment.

The Zs he said are also paid a basic salary and a bonus and also receive share options which are paid out once the senior employee stays with the company for a specific period of time.

The share option scheme, Mr O'Leary said, is designed to promote company loyalty among the Zs and other senior personnel.

Mr O'Leary also told the court that as a "Z" Mr Bellew would not only have access to important commercially sensitive information concerning Ryanair that would benefit a rival, about the part of the airline that the defendant was responsible for, but all other areas as well.

While all airlines could be regarded as rivals to Ryanair, Mr O'Leary said that Easyjet would be considered the airline's main competitor in the low-fares sector.

Ryanair's action commenced before Mr Justice Senan Allen this morning and is expected to last for several days.

Ryanair seeks an order requiring Mr Bellew to specifically perform his contract of employment with Ryanair, which includes the non-compete clause.

It also seeks an injunction preventing Mr Bellew of Glenconnor House Killarney, Co Kerry from acting contrary to the post-termination restrictions allegedly contained his contract of employment.

Ryanair's claims are denied by Mr Bellew, (represented by John Rogers SC and Tom Mallon Bl,) who has held several senior roles in the aviation industry having previously been Malaysian Airline's chief executive, and Ryanair's director of flight operations.

Share option scheme

In his defence, Mr Bellew denies any breach of contract and says the purported clause is unenforceable.

He says that the non-compete clause was included on the basis he would be included in a share option scheme offered to him by Ryanair in 2018. He claims that he was not included in that scheme which renders the non-compete clause null and void.

He also says that he will adhere to, and honour, his obligations of confidentiality towards Ryanair after he departs the airline.

Opening the case Mr Hayden said Mr Bellew knew from the "get-go" that a non-compete clause was "part and parcel" in his contract of employment.

In his evidence, Mr O'Leary said Mr Bellew rejoined Ryanair in following a chance meeting with him in October 2017.

Mr O'Leary said the airline was experiencing "a rocky" period in 2017 with issues over pilot rostering and pilot recruitment.

Mr Bellew had previously worked in the area of pilot recruitment, and was "well-liked" by them, Mr O'Leary added.

Following discussions with Mr Bellew, he took up the role as the COO with Ryanair. His role was to take charge of all flight operations, and he was also responsible for flight operations, engineering, and pilot training and recruitment.

He and was paid €550,000 per year plus a bonus of up to €500,000. He was also offered share options in Ryanair.

After leaving Ryanair to take up a senior post with Malaysia Airlines in 2015 he had missed out on a payment under a share option scheme, Mr O'Leary said.

As part of the agreement reached paving the way for him to return to Ryanair a payment of €1.1m was made to Mr Bellew under the share agreement scheme that had been in place between 2014 and 2019.

Mr O'Leary said that the issue of a non-compete clause was never raised with him by Mr Bellew.

As part of his role, Mr Bellew would have attended regular meetings with the other "Zs" where important and sensitive information about Ryanair would have been discussed.

Mr Bellew was "privy" to sensitive information about his own field within the airline but also information about other areas within Ryanair, as the "Zs" all exchanged their weekly reports with each other.

This information included the price Ryanair pays for its aircraft tyres and ground services at the airports it operates out of, he said.

Michael O'Leary: 'I don't use email'

Mr O'Leary said that in November 2018 he sent a memo to Mr Bellew about his performance as COO.

He said that things that should have been done by Mr Bellew were not being done, and decisions were not being made by his COO for several weeks.

In reply to questions from Mr Hayden, Mr O'Leary said some of the things he was unhappy with included the COO's handling of when Ryanair changed its policy regarding baggage and when Mr Bellew went to Brussels to speak at a function.

Information contained in reports from the COO to the CEO was also incorrect Mr OLeary added. Mr O'Leary, who told the court he does not use email said that he was further dissatisfied with a response he received from Mr Bellew regarding his memo.

The hearing continues.

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