Post-termination restrictions

David Reid
26th Oct 2012

The High Court has recently decided that an employee can be bound by post-termination restrictions contained in an unsigned version of his/her contract of employment if the terms of that contract have been impliedly accepted by the employee.

In this case, while the employee had signed and returned his initial contract of employment, he had not signed a later version which contained updated clauses in respect of a promotion. This later version contained post-termination restrictive covenants and a number of voluntary employee benefits.

 

The Court held that by applying for private medical insurance after having read the later version of his contract meant that it could be inferred from the employee’s actions that he had accepted all of its terms, including the restrictive covenants.

 

This case emphasises the principle referred to in our previous article (Patsystems Holding Ltd v Neill) that where an employer is asking an employee to agree to restrictive covenants after a promotion, the employee should either be issued with a fresh contract, or should have their attention drawn to these covenants in a contractual variation letter. However, for the avoidance of ambiguity, employers should always ensure that the employee signs and returns whichever document is used in order to demonstrate the employee’s express agreement to the restrictive covenants.

 

Case name: FW Farnsworth Limited v Lacy [2012] EWHC 2830 (Ch)

 

The full case can be found here.

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