Pickwell & Anor v Pro Cam CP Ltd

Restrictive covenants in an employment contract signed after employment has begun may be supported by consideration where the employer would otherwise have terminated the employment or withheld access to customers, training and business opportunities. Continued employment may also amount to consideration where the employee’s conduct is objectively referable only to acceptance of the new terms.

The reasonableness of a covenant is assessed when it is made, by reference to the parties’ reasonable contemplation and the employer’s legitimate interests. A covenant imposed on a trainee is not necessarily invalid merely because its practical operation is contemplated after qualification. Customer connection and goodwill may be protected by non-dealing and non-solicitation restrictions limited to customers with whom the employee dealt. A six-month notice period followed by six months’ restraint was reasonable in the agricultural supply business on the evidence.

The claimants were trainee agronomists employed by Pro Cam. Each first accepted an offer of employment and began work, then signed a formal contract containing six-month notice provisions and six-month non-dealing and non-solicitation covenants.

They later left to join a competing agricultural supplies business and sought declarations that the covenants were unenforceable. Pro Cam counterclaimed for declaratory and injunctive relief. The issues were whether the formal contracts and covenants were supported by consideration, whether Pro Cam had a legitimate protectable interest, and whether the restrictions were wider than reasonably necessary.

1. Outcome. The claims challenging the restrictive covenants failed. Judgment was entered for Pro Cam, which was entitled to the relief sought in its counterclaim. Counsel were invited to draw up the final order.
2. Consideration. The formal contracts were supported by consideration. Applying Woodbridge & Sons v Bellamy [1911] 1 Ch 326, the court inferred that refusal to sign would probably have led to termination on short notice and the withdrawal of access to Pro Cam’s customers. The claimants’ acceptance was also express. Alternatively, their continued work was objectively referable only to acceptance of the new terms, satisfying the approach in Solectron Scotland Ltd v Roper [2004] IRLR 4. The benefits of continued employment, training, status, customer introductions and commercial opportunities provided further consideration.
3. Protectable interest. Pro Cam had legitimate interests in its customer connections and goodwill. The covenants were assessed at the date of contracting and could properly regulate future dealings contemplated by the parties. It was unnecessary to decide whether commercially sensitive customer information was a trade secret.
4. Scope and duration. The covenants did not prohibit competition generally. They applied only to relevant customers with whom the claimants had dealt and to relevant goods or services. The court distinguished Bartholomews Agri Food Limited v Thornton [2016] EWHC 648 (QB), which concerned a substantially wider non-competition covenant. The agricultural business’s seasonal cycle, the time needed to transfer customer relationships and the need to recruit and introduce replacements justified six months’ notice followed by six months’ restraint. The restrictions were no wider than reasonably necessary.