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Court Rules Restrictive Covenants Are Enforceable

In the recent case of Bartholomews Agri Food Limited v Thornton, the High Court found that a restrictive covenant included in the contract of employment of an agronomist from the time he began working for his employer as a trainee was manifestly inappropriate at that time and remained unenforceable throughout his employment. Furthermore, as the customers with whom he dealt accounted for only about 1 per cent of the company's turnover, the covenant as drafted was far wider than was reasonably necessary to protect the employer's business interests.

By contrast, in Pickwell and Another v Pro Cam CP Limited, the Court has found in favour of an employer seeking to enforce non-compete clauses in the contracts of two trainee agronomists after they resigned from their jobs in order to work for a direct competitor.

Mr Pickwell and Ms Nicholls began working for Pro Cam CP Limited in 2009 and 2013 respectively. After commencing their employment, each of them had signed a contract of employment that contained a clause which banned them for six months after the expiry of their notice periods from dealing with, or soliciting, any of their employer's clients with whom they had dealt in the 12 preceding months. With the financial backing of their new employer, they sought a High Court declaration that the covenants were neither valid nor enforceable.

In refusing their application, the Court found that they had expressly consented to the simple, clear and precise terms of the covenants. Although they were at that time trainees, so as yet had no clients, the covenants dealt with future matters that were being contemplated by the parties at the time the contracts were signed. Those terms went no further than was necessary and reasonable to protect their former employer's legitimate interest in preserving its goodwill and customer connections. Had they refused to agree to the terms of the covenant, they would not have been allowed access to clients of the company or confidential information, in which case it was likely that Pro Cam would have terminated their employment.

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    A well-drafted restrictive covenant will protect your legitimate business interests and also be viewed as a reasonable restriction with regard to the particular nature of your business. Contact us for advice.

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