Employment Restrictive Covenant

Last month The High Court considered the enforceability of an employment post termination restrictive covenant in the agricultural industry.

 

Bartholomew Agri Food limited applied to the High Court for an inunction preventing its exiting employee, Mr. Thornton, working for a competitor.

 

The issue for the Court was whether Bartholomews had a legitimate business which required protection. Secondly, whether the clause was no wider than was reasonably necessary for the protection of those interests.

 

The clause concerned was limited in time, limited to the supply of goods or services of a similar nature to those supplied by Mr. Thornton in competition with Bartholomew’s and limited to dealings with Bartholomew’s existing customers.

 

The High Court criticised the clause as being poorly drafted. There were no definitions for what was considered ‘confidential information’ and on one reading the clause prevented Mr. Thornton from being able to work in different counties Also, the words ‘of a similar nature’ were not defined.

 

It was held by the High Court Judge that the clause amounted to a restraint of trade and was unenforceable. The court felt that it was far wider than reasonably necessary for the protection of Bartholomew’s interests. Mr. Thornton had only been responsible for 1% of Bartholomew’s turnover and the clause had been entered into many years before, at a time when Mr. Thornton had no customer contacts and where its terms were manifestly inappropriate for such a junior employee.

 

The case is a reminder of the need to carefully draft restrictive covenants in employment contracts and, more importantly, to define what it is that the business wishes to protect.

 

Employers should therefore accurately reflect each employee’s role and precisely define the type of restricted activity which it is intended to prevent further, the detail and consideration which is in the clause would probably assist an employer in establishing that it had been carefully considered compared to a blanket clause where no real thought or consideration had been given to its precise terms, effects and therefore, justification and proportionality.

 

Our Employment law team deals with employment and regulatory law and advises employers and employees on the enforceability of such contracts.

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