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Contractual disputes and restrictive covenants

Contractual disputes and restrictive covenants

You are a salaried partner in a professional practice. Twelve months ago you agreed to a temporary reduction in salary to alleviate the practice’s cash flow pressures in a difficult economic market. At the point of agreeing to the reduction, you agreed verbally to review the situation at six monthly intervals, this has not taken place and you have now been told that a further decision will not take place until the anniversary of the pay reduction.

You may be considering the following question:

Is my temporary salary reduction agreement binding and can I rely on this as grounds to argue that I should be released from my contract and the onerous restrictive covenants which it contains?

We need to establish exactly the basis and circumstances in which you agreed to the variation of your contractual terms, whether it has been documented in any way and how the relationship between you and the partnership has been affected by this decision. The enforceability or otherwise of the restrictive covenants may be open to challenge and this is likely to depend on how reasonable it is for the company to have a level of protection; what the industry ‘norm’ is in respect of restrictions and your level of seniority.

For further guidance on contractual disputes and restrictive covenants please contact us on 0870 421 1952.

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Contractual disputes and restrictive covenants

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