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Restrictive covenants

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 Thanks to James English of Hempsons solicitors for preparing this case summary

Could a company enforce restrictive covenants against a former employee where there had been no specific consideration?

No, held the High Court in Re-use Collections Limited v Sendall & May Glass Recycling Ltd.

Mr Sendall had worked for Re-use (a glass recycling business) since it was family-run, but it had left family control. He had no written contract of employment, and no post-termination restrictions. In February 2013 he signed a new contract of employment which included a number of restrictions including 6 month non-solicitation and non-dealing clauses, and a 12 month non-competition clause. Shortly, afterwards he left to join a competing business (May Glass), operated by his sons and which he was also involved in.

The High Court refused to enforce the restrictive covenants as Mr Sendall had not received "some real monetary or other benefit" for the variation of contract. He was unaware of one of the benefits which Re-use sought to rely upon and most were unrelated to the proposed new terms. His continued employment was likewise not a benefit since there had been no suggestion he would have been dismissed if he refused to sign up. The court’s reasoning offers guidance for any business considering this course of action.