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Non-compete covenants in Employment Contracts

Introduction

The High Court has refused to enforce non-compete covenants in favour of Bartholemews Agri Food Ltd (B) in its contract of employment with an ex-employee (Mr T). The Court held that the restrictions were wider than is reasonably necessary for the protection of B’s business interests. Mr T joined B as a trainee agronomist in 1997 and signed a contract of employment which contained a restriction preventing him from, amongst other things: i) supplying services which compete with B to B’s customers; or ii) working for a competitor. This restriction remained in place for six months from termination of his employment contract. Mr T became an agronomist and provided technical advice to clients. Mr T resigned in 2015 and intended to join a competitor at the expiry of his notice period. B sought to rely on the non-compete covenants.

High Court

The Court refused to enforce the restrictions on the basis that the restrictions were “wholly inappropriate for such a junior employee”. It held that a restriction that is unenforceable at the time of its imposition remains unenforceable regardless of whether the individual in question becomes more senior. Furthermore, the clause in question applied to all of B’s customers, as opposed to those with whom Mr T had personal dealings. The Court therefore held that the restrictions were far wider than was reasonably necessary to protect B’s business interests.

Comment

This decision reinforces the principle that post-termination restrictions should be no wider than is reasonably necessary to protect legitimate business interests. Anything wider than this is likely to be unenforceable. Non-compete covenants should therefore be drafted with care.

This should not be relied upon for legal advice. If you would like any further information or advice please email richard@clariclegal.co.uk.

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