Chester 01244 405555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

Shrewsbury 01743 443 043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Manchester 0844 800 8346

Pall Mall Court
61-67 King Street
Manchester M2 4PD

Send us a message
Our Offices

Employee bound by restrictive covenants in unsigned contract of employment

6th November, 2012

In the recent High Court case of FW Farnsworth Ltd and another v Lacy and others [2012] EWHC 2830, it was held that an employee will be bound by the restrictive covenants contained in a new contract provided to them after promotion even where the contract has not been signed and returned to the employer.

Mr Lacey was employed by Northern Foods Limited and worked at its subsidiary, FW Farnsworth Limited. In or around April 2003, Mr Lacey signed his first contract, which did not contain any post-termination restrictive covenants. In April 2009, Mr Lacey was formally promoted and sent a new contract that September which contained post-termination restrictive covenants. Mr Lacey briefly looked at the contract, but did not sign or return it to his employer and did not raise any objections in relation to it. The 2009 contract provided additional benefits; the ability to join a pension scheme and apply for private medical insurance for himself and his family. In or around March 2010 Mr Lacey joined the pension scheme and applied for and received private medical insurance cover from April 2010. In March 2012, Mr Lacey resigned in order to join a competitor of Northern Foods. Northern Foods brought proceedings against him in the High Court to enforce the post-termination restrictions contained in his 2009 contract; prohibiting him for working for a rival business and soliciting certain customers for six months following the termination of his employment.

Mr Lacey argued that he could not be bound as he had not signed or returned the contract. He stated that his employee status meant he was able to join the company pension scheme and claim medical cover. Northern Foods argued that Mr Lacey’s implied acceptance of the 2009 contract could be inferred by his actions in joining the defined contribution pension scheme and obtaining the private medical insurance family cover and this argument was upheld by the court. An interim injunction was granted and in the return hearing the court decided that Mr Lacey was bound by the 2009 contract containing the post-termination restrictive covenants and therefore the injunction should continue for the full six months post termination. It was held that Mr Lacey’s reading of the 2009 contract would, at the very least, have “alerted him to some redefinition of his relationship in legal terms” and choosing to apply for the new private medical insurance cover not previously available to him without protest or reservation, was “an unequivocal act referable only to his having accepted all the terms of the 2009 contract from the date of that application (in March/April 2010)”.

This case highlights the importance for employers of ensuring that existing employees sign and return new contractual terms which are issued to them following a change in role or a promotion. For further advice or information relating to the enforceability of post-termination restrictive covenants, please contact Helen Watson on 01244 405565 or send an e-mail to h[email protected].


You might also be interested in...

Legal expert’s data protection workshops pull in the crowds

22nd May, 2018

With the General Data Protection Regulation (GDPR) coming into force in May, businesses across Shropshire have been flocking to hear more about the new laws Paul Bennett, a partner at law firm Aaron & Partners LLP, has been delivering seminars in partnership with the Shropshire Chamber of Commerce An employment solicitor from Shrewsbury is urging businesses across the... Read More »

Experienced HR leader joins Aaron & Partners LLP

15th May, 2018

Experienced HR leader joins Aaron & Partners LLP Law firm with offices in Chester and Shrewsbury appoints Kate Robertson to drive HR strategy for more than 120 staff and to support the company’s growth Chester law firm Aaron & Partners LLP has strengthened its senior leadership team with the appointment of an experienced human resources manager. Kate Robertson... Read More »

When you should NOT pay the bailiff…

24th April, 2018

Jan Chillery, Insolvency Partner at Aaron & Partners LLP, shares her experience and the reasons why we should be cautious before paying so-called “bailiffs” over the phone or online without vetting them first. My neighbour has told me that recently he had a CCJ (County Court Judgment) against him. A day or so later, he received a phone call... Read More »

Contact Us