Restrictive Covenants – Why they’re important for both employee and employer.

Susan Cawley & Tenon FM – 2018 (UK case)

Ms Cawley, had been employed by Tenon FM Limited (‘Tenon’) for 10 years. Tenon claimed that they discovered Ms Cawley was trying to recruit one of her team to join her at her new employer, a competitor company, which was contrary to the restrictive covenant in her contract of employment.

Tenon’s case was that initially Ms Cawley was employed by a written 2008 Contract but that this had been replaced by a 2011 Contract. Both contracts contained restrictive covenants, but those contained in the 2011 Contract were more onerous. Ms Cawley’s position was that she had signed neither of her contracts of employment, on the basis that she did not agree to the restrictive covenant clauses in either contract.

Tenon wrote to Mrs Cawley outlining their concerns about her alleged breach of the restrictive covenants, giving her only 12 hours to respond. In any event, the “Before Action” Letter sent to her made it clear that proceedings would be commenced, regardless of any response. Tenon served its application for an injunction to enforce the restrictive covenants on Ms Cawley on the eve of her father’s funeral (known to Tenon), and at a time when (as held by the Judge) there was no apparent need to do so.

In court, Tenon was unable to produce a signed copy of the 2008 or 2011 Contract. Tenon provided a copy of yet a further unsigned contract; this one dated 2012 and also containing restrictive covenants. According to its Statement of Costs, Tenon had spent approximately £200,000 in making the application for injunctive relief.

The decision
The Judge held that Tenon’s claim failed on several fundamental issues including:

The fact that the employer could not produce a signed contract – he found that Ms Cawley’s positive evidence that she had refused to sign the Contract was not effectively countered by Tenon.

TAKE AWAY POINT:  Make sure you engage with you obtain signed contracts from all employees and if they refuse, you address with them the issues of concern. Better to have a “watered down, but mutually agreed” set of restrictive covenants than a set of strong covenants which are unsigned and not agreed!

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