Heather Platt’s article for LexisNexis considers the enforceability of restrictive covenants in the agricultural industry.
This article was first published on LexisPSL Employment on 28 June 2016.
Enforceability of post-termination restrictive covenants within the agricultural industry
Employment analysis: The recent case of Pickwell v Pro Cam considered the enforceability of post-termination of employment restrictive covenants within the agricultural industry. Heather Platt, barrister and mediator at Pump Court Chambers, explains the background to the case and the implications of the judgment.
Pickwell & Another v Pro Cam CP Ltd  EWHC 1304 (QB),  All ER (D) 49 (Jun)
The Queen’s Bench Division held that the claimant’s claim for declaratory relief that the restrictive covenants regarding subsequent employment were invalid would be dismissed and that the defendant employer’s counterclaim for the enforcement of the covenants would be allowed.
What is the factual background to this claim?
The case is about the enforceability of post-termination of employment restrictive covenants within the agricultural industry, specifically, a six-month non-dealing restriction and a six-month non-solicitation clause.
The case was brought by two claimants, Ms Nicholls and Mr Pickwell, who had worked for Pro Cam since they were trainee agronomists. The plan was that the two claimants were to be trained to a sufficient level so that they could take over from long serving agronomists who were nearing retirement.
The long-serving Pro Cam agronomists had started to hand over a substantial part of the Pro Cam customer base once the claimants were qualified-in the case of Ms Nicholls since January 2014 and in the case of Mr Pickwell since February 2011.
Mr Pickwell had signed the contract containing the restrictive covenants on 14 December 2009 and he qualified in July 2010, and then worked under the supervision of a qualified agronomist until July 2011. Ms Nicholls signed her contract containing the restrictive covenants on 21 March 2013, she qualified in July 2013 and worked under supervision until July 2014.
During 2015, Pro Cam’s main rival, Frontier, made contact with Mr Pickwell and Ms Nicholls. They both decided to resign and to work for Frontier. They indicated their intentions to Pro Cam and gave their six months’ notice.
During cross-examination, both claimants admitted that had they not signed the contracts, they would probably have been given one week’s notice as they were both on probation with a short notice period. Neither claimant expressed any problem with the contracts they were given and they had been prepared and happy to take its benefit, including access to farmers and bonus derived therefrom which they would not have been given if they had refused to sign.
What were the main issues?
The issues for the High Court were:
What were the conclusions of the High Court? Valuable consideration
The court found that at the time the claimants signed the formal contract of employment (rather than the letter governing their probationary period which was terminable at one week’s notice), they expressly consented to its terms. The court went on to find that the claimants had received valuable consideration in the form of access to commercially valuable work, valuable status and training so that they could progress in their careers, despite the fact that the contracts were signed after the commencement of the formal roles. The court found that at the time the contracts were signed, Pro Cam and the claimants had in their contemplation that the claimants would in due time be dealing with farmer customers as qualified agronomists. That was the very reason for the restrictive covenants. Had the claimants not accepted the terms of the formal contract, they would not have had the commercial opportunity to take over from the outgoing agronomists.
The wording of the covenants was ‘simple, clear and precise’.
Legitimate interest requiring protection
Protectable interest in terms of goodwill and customer connection was established on the evidence. This case was distinguished from that of Bartholomews Agri Food Ltd v Thornton  EWHC 648 (QB),  All ER (D) 207 (Mar) which the court held was not applicable here as that non-compete clause was unenforceable as it prevented the ex- employee from competing with any of Bartholomew’s customers, even though the employee had only ever personally dealt with 1% of them and it covered areas of the country in which he had never worked.
For more information on the decision in Bartholomews, see News Analysis: Enforceability of a post termination restrictive covenant.
Scope of covenants
The claimants’ argument that the restrictive covenants entered into when they were trainees were self-evidently wider than necessary and their reliance on of Bartholomew Agri Foods v Thornton was rejected by the court. His Honour Judge Curran QC instead found that, at the time of signing the relevant contract of employment, both parties to it contemplated the trainee period as an initial temporary phase which would enable claimants in due time to become fully-fledged agronomists with a long term future in the employment of Pro Cam. The claimants argued that the six-month notice period plus a further six-month restrictive covenant was excessive-however, the judge preferred the evidence on behalf of Pro Cam which was that it takes a long time to build up relationships of trust with farmers. Therefore the covenants were no wider than reasonably necessary to prevent the loss of Pro Cam’s goodwill and legitimate commercial advantages.
What lessons can be taken from this judgment about the enforceability of a restrictive covenant? What does this case say about the relevance of the parties’ future intentions as at the time they signed the contract?
The court was persuaded by the uncontested evidence of the future intentions of both parties at the time the contracts were entered into-namely that the period of being a trainee would be temporary and that both claimants were being groomed and trained to become fully fledged agronomists with the intention that they would take over the workload and relationships already established and nurtured for years by longstanding Pro Cam employees who planned to retire within two to three years.
One wonders why Mr Pickwell’s starting salary was £23,000 in 2009 yet Ms Nicholl’s starting salary was just £18,000 in 2012 bearing in mind they were both employed as trainee agronomists. However, equal pay or lack thereof was apparently not in issue in this case.
How does this case differ from the similar case of Bartholomew?
The cases involved covenants which were entered into while the employees were trainee agronomists. In Bartholomew the court held that the terms were manifestly inappropriate for a trainee. That case differs from the instant case as it involved a poorly drafted non-compete clause rather than well drafted non-dealing and non-solicitation clauses as here. Typically, non-compete clauses are held to a higher standard by the courts as they are the most draconian of clauses rather than a non-dealing or non-solicitation clause, which do not prevent the exiting employee from working for a competitor but prevent the exiting employee from damaging the employer’s business by doing so.
What should lawyers be advising their clients following this judgment?
Key things to take from this decision are that:
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