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When are Post Termination Restrictions Enforceable?

There is a common misconception amongst employers that if a contract is signed by an employee then the clauses contained within it, will be enforceable, regardless of the fact that a revised version might be substantially different. Where post termination restrictions, which predominantly relate to non-solicitation, non-dealing and non-competition, are unilaterally imposed, they may not be enforceable unless some form of consideration is paid.  

This principle can be illustrated by the decision in Re-use Collections Limited v. Sendall & May Glass Recycling Ltd where Mr Sendall was initially employed by Re-Use, a glass recycling business with no written terms or conditions or post-termination restrictions. During his employment the company requested him to sign an employment contract containing post-termination restrictions, which sought to protect the company from non-solicitation and competition. Mr Sendall received no consideration from the company for signing the new agreement.

When Mr Sendall left the company to work for a competitor the company sought to enforce the post-termination restrictions. The court held that the restrictions were not legally binding because Mr Sendall had not received “some real monetary or other benefit” (consideration) in return for him signing up to the new restrictions. 

The company’s argument that the said restrictions were introduced as part of a package under which benefits were conferred upon Mr Sendall failed on the basis that Mr Sendall already benefited from the majority of the benefits prior to entering into the new contract. 

Unsurprisingly his continued employment was not considered as a benefit because there had never been any suggestion he would have been dismissed had he refused to sign up to the new contract.

Conclusion 

The moral of the story is always tie in revisions of employment contracts, to include post-termination restrictions, with a pay rise. 

As always if I can provide you with any further assistance on queries relating to post-termination restrictions or any other issue, please do not hesitate to contact me for a free consultation on 0113 350 4030 or hello@scesolicitors.co.uk.

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SCE Solicitors is a boutique employment law and dispute resolution practice based in Leeds which advises clients nationwide.  Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

Samira Cakali

Solicitor Advocate LLB (Hons), Higher Rights (Civil) at SCE Solicitors
Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.
Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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