What is the best time to review post termination restrictions?

2017-08-22 Jennifer Renney posted:

For a post-termination restriction to be enforceable by an employer, it first has to be a contractual term; ie, incorporated into a contract between the employer and employee. This is usually the contract of employment, but may in some cases be a separate contract eg Non Disclosure Agreement.

Post termination restraints are normally introduced at the start of employment but may also be introduced at a later stage. The usual contractual requirements will apply, namely offer, acceptance and valid consideration. The employee’s consent must be (a) given freely and free from duress; and (b) supported by consideration, ie some benefit to the employee.

That is why many employers consider reviewing their existing restraints or introducing new ones when they are offering a pay rise or promotion to their staff.

Employers can also introduce new restraints on termination. Where the consideration for the new post-termination restrictions is monetary, employers should generally take care to ensure that any severance agreement specifies a particular sum as consideration for the new restrictions as these are taxable.

If you are wondering whether your business is properly protected by restraints, or you are an employee or consultant who is unsure as to whether the restraints are enforceable, we are specialists in this field and are happy to have a chat with you to discuss your position. Do not hesitate to contact us at 01225 632240 or email info@renneyandco.com with any questions.

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