It can be common for employers to seek to tighten up existing restrictions when issuing a new contract to ensure that the restrictions are still relevant for the individual and the business. Sometimes an employer will seek to introduce restrictions for the first time. A High Court case is a useful reminder that the employer will need to provide consideration (one of the basics of contract formation) if it wants to introduce restrictions for the first time.
In the case of Re-use Collections Limited v Sendell & May Glass Recycling Ltd, Mr Sendell had worked for Re-use for a number of years but had no written contract of employment and thus no post-termination restrictions. He then signed a new contract of employment which had restrictions including a 6 month non-solicitation and non-dealing and a 12 month non-competition clause. However he then went to join May Glass who were a competing business.
The High Court refused to enforce the restrictions as he had not received any consideration for the contract as he had not received any “real monetary or other benefit” and since there was no threat of dismissal if he refused to sign the new contract, his continued employment was not a benefit.
Employers should therefore consider whether consideration is necessary when issuing new contracts to ensure that any restrictions are accepted and can thus be relied upon later.