Restrictive covenants in employment contracts are contractual clauses designed to protect a business’s interests when an employee leaves. These provisions aim to prevent former employees from using confidential information, poaching clients or colleagues, or competing unfairly against their former employer. While common across many industries, their legal enforceability depends largely on how they are drafted, the seniority of the employee, and their reasonableness in scope and duration.
At Stephensons, our employment law specialists regularly advise individuals on the implications and validity of restrictive covenants in their contracts. Understanding your rights and obligations in relation to these clauses is essential before signing a contract or leaving your employment.
What are restrictive covenants?
Restrictive covenants are post-termination obligations placed on employees to protect an employer’s legitimate business interests. These covenants typically come into effect once the employee leaves the organisation and may apply for a set duration and within a specified geographical area. They can cover various aspects of post-employment conduct, depending on the role and nature of the business.
Common types of restrictive covenants include:
- Non-compete clauses – preventing the employee from working for a competitor
- Non-solicitation clauses – restricting the employee from approaching clients or customers of the former employer
- Non-dealing clauses – prohibiting dealings with former clients or contacts, whether or not solicited
- Non-poaching clauses – preventing the employee from recruiting former colleagues
- Confidentiality clauses – restricting the use of sensitive or proprietary information
These clauses are not included in every employment contract but are more typical in senior roles, sales positions, or industries where client relationships and trade secrets are particularly valuable.
Are restrictive covenants enforceable?
Restrictive covenants in employment contracts are enforceable under UK law only if they are deemed reasonable in scope, duration, and geographic reach. English law tends to view such clauses as a restraint of trade and therefore void unless the employer can demonstrate the clause protects legitimate business interests and goes no further than necessary to do so.
To be enforceable, a restrictive covenant must satisfy the following criteria:
- It protects a legitimate business interest, such as trade secrets, confidential information, or client relationships
- It is no wider than necessary in terms of time, geography, and the specific activity being restricted
- It is not contrary to public policy or unduly restrictive of an individual’s ability to earn a livelihood
For instance, a clause that prevents a junior employee from working in the same industry anywhere in the UK for two years is unlikely to be enforceable. However, a six-month non-solicitation clause for a senior sales executive working in a specified region may be considered reasonable and valid.
Challenging restrictive covenants
If you are subject to restrictive covenants and are considering a new role, it is essential to understand whether those restrictions are enforceable and what risks you might face in breaching them. Similarly, if your former employer threatens legal action based on a covenant, obtaining legal advice promptly is key.
At Stephensons, we can assess the wording of your contract, evaluate the enforceability of the clauses, and provide tailored advice based on your circumstances. In many cases, it may be possible to resolve matters through negotiation with your former employer or provide assurances that alleviate their concerns without compromising your career.
Negotiating restrictive covenants
You do not have to accept restrictive covenants without question when entering into an employment contract. Particularly when negotiating the terms of a new role, you may have scope to amend or limit the extent of any restrictive covenants. Common negotiation points include reducing the length of time a clause applies, limiting the geographical scope, or narrowing the type of work or clients covered.
It is advisable to seek legal advice before signing any contract that includes post-termination restrictions to ensure the terms are fair and proportionate. Employers often use template contracts which may contain unenforceable clauses. Having an employment solicitor review the agreement can help protect your future options while still meeting the employer’s legitimate concerns.
Restrictive covenants and garden leave
It is important to understand how restrictive covenants interact with other contractual provisions, such as garden leave clauses. When on garden leave, you remain employed and bound by the contract, even though you are not required to work. Any restrictive covenants typically begin once garden leave ends.
In practice, this means the overall restriction period can extend beyond the end of your active employment. For example, if you are placed on three months' garden leave and subject to a three-month non-compete clause, you could be restricted from working for a competitor for six months in total. This is a key consideration when assessing the impact of these clauses on your career progression.
What happens if you breach a restrictive covenant?
Breaching a restrictive covenant can lead to serious legal consequences. An employer may seek legal remedies, including:
- An injunction to prevent further breaches
- Damages for losses suffered due to the breach
- Legal costs
Employers must act quickly to enforce restrictive covenants, usually within a matter of days or weeks of becoming aware of a breach. Courts generally seek to uphold only those clauses deemed reasonable and necessary, and may refuse to enforce vague or overly broad restrictions.
If you are accused of breaching a restrictive covenant, it is vital to speak to a solicitor immediately. There may be legal arguments available to challenge the validity of the clause or negotiate a satisfactory resolution that avoids court proceedings.
Restrictive covenants and new employers
When moving to a new role, it is important to disclose any post-termination restrictions to your prospective employer. Failing to do so could put both you and your new employer at risk of legal action. Many businesses will carry out due diligence to ensure that onboarding a new hire will not expose them to potential legal liabilities from a competitor.
Some employers may even help you navigate or challenge restrictive covenants, particularly if they believe the clauses are unenforceable or abusive. A solicitor can assist you in managing these conversations and ensuring all legal risks are properly addressed.
How Stephensons can help
Stephensons provides expert legal advice on all aspects of restrictive covenants in employment contracts. Whether you are negotiating new contract terms, preparing to leave your current role, or facing enforcement action from a former employer, our experienced employment law team can assist.
We understand how such clauses can affect your ability to work and move forward in your career. Our solicitors work to protect your legal rights while helping you manage relationships with past or future employers professionally and lawfully.
We offer clear, practical guidance based on your specific circumstances, including reviewing contract terms, drafting responses to legal threats, and representing you in negotiations or court if necessary. With a strong reputation in employment law, Stephensons is well placed to help you navigate the complexities of restrictive covenants with confidence.
Final steps
If you are dealing with issues surrounding restrictive covenants in employment contracts, speak to a solicitor without delay. Our team at Stephensons is ready to guide you through your options and protect your future career opportunities.
Contact us
Contact us today by completing our enquiry form to speak with one of our experienced employment solicitors at Stephensons.
Comments