The High Court has held that an unenforceable restrictive covenant cannot subsequently be revived unless that is unequivocally the contractual intention of the parties. The court said a restrictive covenant which was unenforceable when it was entered into did not become enforceable by the employee’s subsequent change in circumstances.
The employee’s agreement that his previous terms would ‘remain unchanged’ on promotion was not a sufficiently clear and new agreement to the restrictive covenant to revive it.
This case serves as a useful reminder that employers should keep restrictive covenants under constant review. On a change of role, ideally, new restrictions should be entered into. However as a minimum at this stage restrictions should be reviewed and agreed by the parties in any event.
PAT Systems v Neilly