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Enforcing restrictive covenants in employment contracts
- AuthorHoward Robson
In the recent case of Bartholomews Agri Food Ltd v Thornton the High Court rejected an employer’s application to enforce the terms of a restrictive covenant contained within a contract of employment.
Mr Thornton had been employed by Batholomews Agri Food Ltd since 1997 to provide customers with agronomic advice. In December 2015 he resigned from his role there with the intention of starting work with Pro Cam UK Ltd. Mr Thornton was to undertake other duties in his new role at Pro Cam UK Ltd, but he would continue to provide agronomic advice to clients.
Bartholomews Agri Food Ltd applied for an injunction to enforce the terms of a restrictive covenant contained within Mr Thornton’s contract of employment. Clause 10.2 of Mr Thornton’s contract of employment sought to prevent him from supplying goods and services “of a similar nature” to Bartholomews Agri Food Ltd’s customers for a period of six months immediately following the end of his employment. The covenant was in place when Mr Thornton first started with the business as a trainee agronomist in 1997. At that time he had no experience or customer base and therefore the clause was ‘manifestly inappropriate’ and in restraint of trade.
The Court ruled, in accordance with previous case law, that a restrictive covenant which was unenforceable when it was first imposed remains unenforceable, regardless of whether the employee is later promoted to a role in which it could be regarded as reasonable.
The Court went onto find that the restrictive covenant was wider than was reasonably necessary to protect the business’ interests. Mr Thornton had been responsible for only around 2% of the business’ overall turnover. The Court suggested that the restrictive covenant might be reasonable if it referred only to those customers with whom Mr Thornton had himself had dealings for a period of time before leaving, as opposed to all customer of the business.
The Court was not persuaded by that fact that, somewhat unusually, Clause 10.2 provided for Mr Thornton being paid during the six month period that the restrictions were in force, provided that he complied with them. The Court did not accept that this impacted upon the enforceability of the covenants, after all, the effect of this would be to allow an employer to purchase a restraint of trade.
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