The High Court has ruled in FW Farnsworth Limited & Another v Lacy & Others that an employee, who following a promotion was provided with a new contract containing post termination restrictions, was bound by those restrictions even though he did not sign the new contract.

What does this mean?

An employee can, by his conduct, accept the terms of a new contract. In this case he did so by applying for additional benefits that were only available under the second contract.

What should employers do?

Where new contracts of employment are issued employers should ensure that they are actually signed and returned by their employees. Had the employee in this case not applied for the additional benefits, the Court may not have held that he was bound by the terms of the new contract. Employers should always take specific legal advice before seeking to enforce a restrictive covenant.