Most employers will know all staff need to have a written employment contract. However, what if the employee hasn’t signed it?
That is exactly the problem Tenon FM limited faced in their High Court case against Ms Cawley.
Ms Cawley worked for Tenon FM for 10 years until her resignation in May 2018. During this period, her employment contract was varied twice to contain more onerous restrictive covenants. The amended contracts stated that they would only be effective from their date of signature.
In August 2018, Ms Cawley was suspected of attempting to solicit an ex-colleague on behalf of her new employer. Tenon FM promptly applied for an interim injunctive to enforce the post-termination restrictive covenants contained in the employment contracts. They faced a problem – there was no evidence that they had ever been signed.
The High Court has emphasised that where an employer wishes to vary an employment contract to incorporate more onerous post-termination restrictive covenants, they should ensure the contract has been signed and further, that the employee receives some valid consideration (or benefit) for their agreeing to the change.
Any unreasonable conduct from employers when seeking interim relief can also reduce chances of success.
The High Court dismissed the application on numerous grounds:
- The ex-employer was not able to prove there was an agreement with to the changes by way of a signed contract; and
- There was no identifiable, adequate consideration for entering into the more onerous restrictions.
The Court also criticised the disproportionate costs incurred in seeking the injunction, and the inequitable, aggressive way in which it had been pursued; including the insistence on unreasonably short (12 hours) and arbitrary deadlines to respond to letters before action.
What can employers learn?
This case not only highlights the importance of ensuring – through effective HR administration – that there is evidence of valid agreement to post-termination restrictions, but also that any unreasonable conduct by an employer for injunctive relief can have implications on the prospects of success. Careful planning before aggressively pursing individuals is essential.
Tenon FM Limited v Cawley (High Court)