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Restrictive Covenants and Reasonableness

May 03, 2016
In Bartholomews Agri Food v Thornton, the court rejected the reasonableness of a restrictive covenant in the employment contract for several reasons. 

The first was on the principle that a covenant that is unenforceable when it is first imposed remains unenforceable. This is regardless of whether the employee is later promoted to a position in which it would be considered appropriate. For example, it would be unreasonable to impose a non-compete clause on a junior member of staff who has no previous experience or customer base as this would be inappropriate and a restraint of trade. However, this restriction would still be unenforceable despite that employee later progressing through the company.

Secondly, the court found that the covenant was drafted too widely as it prevented the employee from dealing with any customer of the Bartholomews Agri Food regardless of whether they had had any prior dealings with them. As the employee only worked with 2% of the employer’s customer base, it would be unfair to restrict them from dealing with the remaining 98%.

Thirdly, the covenant contained a provision that the Bartholomews Agri Food would pay the employee in full during the six month period in which they would be effectively restrained. The court found that this would allow an employer to purchase a restraint of trade and was therefore manifestly unfair.

This case highlights the importance of tailoring restrictive covenants to each individual employee as well as conducting regular contract reviews. 

Darren Hayward

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Darren Hayward

Darren joined Nockolds in 2003 and is the firm’s Managing Partner and Partner in charge of our Employment Law Team. 
 
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