It’s a familiar scenario: after a promotion, an employee is sent a new contract to sign. It includes some new benefits, but also there are some post termination restrictions in there. The employee looks it over, perhaps, then tucks it away at the back of a drawer to deal with later, or with no intention of ever signing it. Fast forward a few years – that employee has left his job, and is working for a new employer. Can his old employer enforce those post termination restrictions, even though the employee never expressly agreed to be bound by them?
The question of whether a contract of employment which is unsigned is nonetheless effective is one that is often asked and it is therefore very helpful to have some guidance from the Chancery Division of the High Court. Often much emphasis is placed on the obligation for an employer to provide a written statement of main particulars of employment within eight weeks from the start of the employment. Failure to do so gives the employee the right to complain to an employment tribunal and to ask the tribunal itself to specify the written particulars. If combined with another or other claim(s) there may also be a right to compensation. However, what is generally far more important for an employer is whether it can rely on the terms of a contract which has been issued to an employee but which has not been signed
According to Mr Justice Hildyard in FW Farnsworth Ltd & Anor v Lacy & Ors the employee may be bound by the terms in the contract.
Paul Lacy and Maria Yuste worked for FW Farnsworth Limited and Northern Foods Limited. It was alleged that during the course of their employment they passed confidential information to a competitor, Pooles of Wigan Limited. Additional defendants, Neil Court-Johnston, Bobella Limited and Joanne Kenedy (sic) were alleged to have participated in the conspiracy.
In 2009 Mr Lacy was issued with a contract which contained restrictive covenants which, for example, prevented him from working for a rival business or soliciting defined customers for a period of six months following the termination of his employment. He had also been issued with a contract in 2003 which did not contain any such restrictions. The key question was whether he was employed under the 2003 contract or the 2009 contract. He had started work in 2000 and signed the 2003 contract when it was issued to him. In 2009 he progressed to the position of Site Technical Manager. Some time after this appointment, in September 2009, he was issued with the 2009 contract which he neither signed nor returned.
The employer maintained that he had impliedly accepted the terms of the 2009 contract because he applied for and received additional benefits which were only available under the 2009 contract, specifically a move to a defined contribution pension scheme and medical benefits for him and his family. In response Mr Lacy maintained that neither of the matters were so unequivocally referable to the 2009 contract as to imply that he was bound by its terms.