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Beware of unsigned contracts!

11 Oct 2018

A recent case has highlighted the importance of having employees sign their employment contracts, especially when they contain provisions that are detrimental to an employee such as post-termination restrictions.

In the case, an employee was promoted during her employment and was given a new contract which contained restrictive covenants, which she did not then sign. When the employee left her employer’s employment, the employer sought an  injunction in the High Court to enforce the post-termination restrictions against her and also an injunction against her new employer to prevent it from employing her.

The employer’s case at the hearing was that it was possible to infer that the employee had agreed to the contractual changes by continuing to work for it. However, there is no authority to support this proposition, particularly where the changes are not of immediate detriment to the employee.

The case serves as a welcome reminder that employers must ensure that employment contracts are signed by all employees, particularly senior employees, because it will be extremely difficult to persuade a court at trial to enforce post-termination restrictions contained in an unsigned contract. If an employer attempts to introduce new post-termination restrictions during employment, it must provide adequate consideration and evidence it.

Sarah Furness

As a side point, the case also highlighted that employers should make sure that all employees at a similar level or who have access to the same confidential information have post-termination restrictions in their contracts. A lack of consistency may undermine an employer’s attempt to argue that the restrictive covenants are necessary to protect their business interests.

For more information on any of the above, or how we can help your business, please contact Sarah Furness, or call 0191 232 8345.