Tenon FM Limited V Cawley
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Background of the Case
Ms Cawley was an employee of Tenon FM since 2008 and had an employment contract containing restrictive covenants. They stated that she was unable to ‘poach’ clients, business or employees for a minimum of 12 months after the termination of her employment at Tenon FM.
In 2011 Ms Cawley was promoted and Tenon FM issued a new employment contract that contained more onerous restrictions which reflected her senior role in the Company. Ms Cawley stated that she had not signed the new terms because she did not agree with them. This was disputed by Tenon, however, they were unable to locate a signed copy.
They had also discovered that Ms Cawley had attempted to ‘recruit’ a co-worker on behalf of her new employer (who was a competitor). Having found this information, Tenon attempted to enforce an interim injunction for her to comply with the restrictive covenants.
The Judge noted that the contracts made it clear that they would only be effective once they had been signed. As Tenon had not presented a signed copy of the contract, Ms Cawley’s contracts were not binding, and it was held that Tenon’s request for an injunction was refused.
It was noted by the Judge that those same onerous restrictions did not apply to the other senior employees despite having the same access to client and confidential information. Therefore the decision was made that enforcing the new restrictions post-termination in this case would be unreasonable.
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Notes for employers
Ideally, employers should do their upmost to ensure that contracts are signed as this demonstrates consent. This is particularly important when it comes to senior members of the Company as they will have greater access to sensitive information; enforceable confidentiality and restrictive covenants can be crucial.
If a contract contains additional post-termination restrictions, the new offer will need to also have sufficient consideration. For example, a pay rise or a bonus.
So that individual employees are not penalised, a Company should place all those at the same level on the same restrictions as any changes in consistency can undermine a legitimate interest to enforce a contractual term.
About the author
James is on the Business Development & Account Management team at Neathouse Partners and regularly posts articles surrounding issues in HR & Employment Law, including case law & legislation updates. If you have a particular issue you would like addressed, feel free to drop James an email, and he will be happy to offer his assistance.
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