The recent decision in Bartholomews Agri Food Limited -v- Michael Thornton 2016 serves as a salient reminder that restrictive covenants must be regularly reviewed, and amended where appropriate, throughout the duration of an individual’s employment.
Mr Thornton worked for Bartholomews as an agronomist for 18 years, before leaving the company to join a potential competitor. Bartholomews sought an interim injunction, relying on a restrictive covenant in his contract. This covenant provided that he could not work for a competitor or be involved in supplying services of a similar nature to any of the company’s customers for a period of 6 months.
Mr Justice McKenna held that the covenant was unenforceable and in restraint of trade. Mr Thornton entered into the covenant when he joined the company as a trainee agronomist in 1997. The level of restriction was manifestly inappropriate for a junior employee, and a covenant which is unenforceable at the time it is agreed will remain unenforceable even if the employee is subsequently promoted to a job where the covenant could have been regarded as reasonable. Even were this not the case, the covenant was still far wider than was reasonably necessary to protect Bartholomews’ business interests: it applied to all customers regardless of whether Mr Thornton had any knowledge of them or had ever worked for them (the clients that Mr Thornton dealt with directly contributed just 1% to Bartholomews’ annual turnover).
The covenant included an unusual provision to the effect that Bartholomews would continue to pay Mr Thornton his full remuneration for the duration of the six months (even if he commenced a new job) provided he did not breach the covenant. However, this did not assist the company in arguing that the covenant should be enforceable, as permitting the employer to purchase a restraint in this way would be contrary to public policy.
This case demonstrates that employers should regularly review their employees’ restrictive covenants, and these should be amended and updated as appropriate as individuals are promoted and become more senior.