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Restrictions come at a cost

A recent High Court case acts as a reminder to employers to carefully consider how they introduce new or improved business restrictions into an existing employee’s contract. Failure to provide adequate consideration could prove fatal to their enforceability.

In this case the Court held that the employer’s failure to offer adequate financial incentive (by which they meant “substantial and not nominal”) meant that the employee was not bound by the restrictions they sought to rely on when he left for a competitor.

Employers keen to introduce or review current business restrictions should consider tying this change in with an offer of a pay rise or promotion. You should be clear that this new ‘benefit’ is conditional on signing the new contract or agreeing to the restrictions. It will rarely be advisable to rely on an employee’s continued employment as adequate consideration.

Please feel free to contact us on 0191 282 2880 for a no obligation chat or email us if you require further advice.

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