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Case law: Employer's unreasonable behaviour can affect ability to enforce post-termination restrictions

Employers seeking to enforce post-termination restrictions in employees' contracts of employment should act proportionately, reasonably and fairly - or they will not be successful, a ruling makes clear.

October 2018

This update was published in Legal Alert - October 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

An employer purported to change an employee's contract of employment twice during her 10 years as an employee. The changes were to impose greater restrictions on what she could do after she left. The amended contracts said they took effect from when the employee signed them - but there was no evidence she ever did sign them.

After she left, she tried to persuade an ex-colleague to come and work for her new employer, in breach of the restrictions. When her former employer sought an injunction to stop her on the basis she had breached the restrictions, she argued that the restrictions did not apply because she had never signed the amended contracts.

The High Court agreed that she had not consented to the changes in the amended contracts. It also said that the employer should have provided some corresponding benefit to her in return for the new restrictions on her (by way of 'consideration'), so the new restrictions did not apply.

The Court also took into account the fact that the employer had behaved aggressively and unfairly, for example, it had:

  • Only given her (an unreasonable and arbitrary) 12 hours to respond to its letter.
  • Told her it was going to court however she responded.
  • Knowingly served the application on her the day before her father's funeral, even though there was no apparent reason to serve it then.

It also took into account the disproportionate costs of around £200,000 the employer had run up, when applying for the injunction.

Operative date

  • Now

Recommendation

  • Employers seeking to enforce post-termination restrictions in employees' contracts of employment should act proportionately, reasonably and fairly - or risk being unsuccessful

Case ref: Tenon FM Limited v Cawley 2018 EWHC 1972

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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