Enforceability Of Post-Termination Restrictive Covenants

Post-termination restrictive covenants preventing agronomists (or crop scientists) from soliciting or dealing with relevant customers is the subject of the recent case of Pickwell and Nicholls v Pro Cam Limited.

The case arises out of a dispute between the two Claimants, Mr Pickwell and Ms Nicholls, and their employer; the agricultural supplies company, Pro Cam Limited, as to the enforceability of restrictive covenants set out in their contracts of employment as trainee agronomists.

The High Court decided that the restrictive covenants were enforceable against the two trainee agronomists and the case illustrates how employers should draft effective covenants.

As trainee agronomists working for Pro Cam the Claimants were expected to acquire the knowledge and develop the skills of an agronomist over a period of training and practical work experience, so that they could take over from long serving colleagues who were nearing retirement. During their training and upon qualification, they were introduced to valuable customers of the company and exposed to confidential and commercially sensitive information. Their contracts contained non-dealing and non-solicitation post-termination restrictions, lasting for six months.

A rival company made contact with both Claimants in 2015. They both decided to resign from Pro Cam, giving six months' notice.

Both Claimants were subject to the same covenants, which provided as follows -

"You will not from the date of termination of your employment either on your own account (whether directly or indirectly) or as a representative employee, partner, director, shareholder or agent of any other person, firm, company or organisation - ...

...for a period of 6 months have any dealings in the sale or supply of any relevant goods or services to any relevant customer...[the non-dealing covenant].

...for a period of 6 months canvass or solicit order for any relevant goods or services from any relevant customer ...[the 'non-solicitation' covenant].

They sought a declaration that they could solicit and deal with Pro Cam's clients on the basis that:

there was no legitimate interest to protect; and the covenants were too wide. As a general rule, the reasonableness of a restrictive covenant must be judged at the time it was entered into; and the more junior the employee, the less likely the courts are to find onerous restrictions to be reasonable and therefore enforceable.

The Court found that the reason for imposing the...