Generally, courts will enforce a restrictive covenant if it protects information that is confidential to the employer and is set within realistic geographical limits over a reasonable time period. In Bartholomews Agri Food Ltd v Thornton, the High Court held that a restrictive covenant that was unenforceable at the time it was agreed because the employee was so junior, remained unenforceable despite his subsequent promotion.
Basic facts
Bartholomews, an agricultural merchant which supplied both products and services to the agricultural sector, hired Mr Thornton in 1997 to work as a trainee agronomist. As such, he advised Bartholomews' customers on issues such as crop planting and rotation, seed choice, soil condition and crop nutrition. Mr Thornton resigned in December 2015, giving three months’ notice, after which he intended to start work for a seed retailer.
However, Bartholomews argued that Mr Thornton was subject to a restrictive covenant which prevented him from supplying goods or services “of a similar nature” in competition with the company without the company’s prior approval across its trading area in six counties. Bartholomews offered to pay Mr Thornton for the duration of the covenant even if he got other employment, as long as he was not in breach of the covenant.
Opposing arguments
Bartholomews applied for an interim injunction to enforce the covenant, arguing that it was aimed at protecting its legitimate business interests, namely customer connection and confidential information. It did not go further than was necessary to protect those interests as it was limited in time and to dealing with the company’s existing customers. In addition, it was limited to a narrow category of cases and to a specific geographical area.
For his part, Mr Thornton argued that the role he was going to take up was different to the job he had done for Bartholomews. In addition, the only relevant information he possessed was knowledge of his clients that he had acquired over time and which was in his head. This was not therefore confidential information. Most of the client information he held was only relevant to a particular season and was therefore soon out of date. As for Bartholomews' customer pricing structures, they also changed from season to season.
High Court decision
The High Court agreed with him that the covenant was in restraint of trade and unenforceable. It had been imposed on Mr Thornton when he joined the company in 1997 as a trainee agronomist with no experience and no customer contacts. Its terms were therefore inappropriate for such a junior employee. As the covenant was unenforceable at the time it was agreed, it remained unenforceable regardless of Mr Thornton’s promotion to a role where the covenant would have been regarded as reasonable.
In any event, the covenant was far wider than was reasonably necessary to protect Bartholomews’ business interests as it applied to all its customers and all its associated companies, regardless of whether Mr Thornton had knowledge of those customers and whether he had ever carried out any work for them. As he was responsible for just over 1 per cent of Bartholomews' turnover, it followed that the remaining turnover was generated by customers with whom Mr Thornton had no direct dealings. It was therefore wrong to restrict him from having dealings with the customers representing most of its client base.
Nor was the Court impressed by the provision that the company would pay Mr Thornton for the period of the covenant as long as he did not contravene the restriction. Instead it held that it was contrary to public policy to let an employer “purchase a restraint”.
It therefore refused the application for an interim injunction.