Post-termination restrictions

[Thanks to Laurie Anstis of Boyes Turner, who is standing in for Daniel Barnett. Thanks also to Kathleen Donnelly of Henderson Chambers for preparing this case summary]

Can an employee be bound by post termination restrictions contained within an unsigned version of a contract of employment?

Yes, says the High Court (Chancery Division) in FW Farnsworth Limited v Lacy, if the terms of that contract have been impliedly accepted by the employee.

The employee had signed and returned a contract sent to him early in his employment with the company, but not a later contract, sent to him following a promotion some years later. The later contract included post-termination restrictive covenants, and a number of elective employee benefits. Mr Justice Hildyard held that the employee's act of applying for private medical insurance, after having read the later contract, and without any protest or reservation, was an unequivocal act referable only to his having accepted all of the terms of the later contract, including the restrictive covenants.

Practitioners will note more generally the comments of Mr Justice Hildyard at paragraphs 55-57 and 77-80 of the judgment, expressing misgivings at the directions given for the determination of the issue by way of a separate mini-trial where the issue was not properly a preliminary issue and not determinative of the proceedings.