Restrictive Covenants Employment
When we talk about restrictive covenants employment agreements, many UK employers believe such clauses are only relevant for senior staff or directors. In reality, restrictive covenants can apply to all levels of staff, and if drafted or invoked incorrectly, they can cause more trouble than they solve.
I have advised employers who assumed that a one-line non-compete in the contract was sufficient, only to discover later that the clause was unenforceable because it was too broad. The good news is that with the right approach, you can use restrictive covenants employment clauses effectively to protect your business while staying fair and lawful.
What you need to know about restrictive covenants employment provisions
The clauses typically cover non-competition, non-solicitation of customers or staff, and protection of confidential information. The reason they matter is that you as an employer invest in your staff, your systems and your client relationships, and you want to prevent unfair use of that investment when someone leaves.
However, the law will only enforce a restrictive covenants employment clause if it is reasonable in scope, duration, geographic extent and goes no further than necessary to protect a legitimate business interest. The key word is “reasonable”. I advise clients to think of these clauses not as iron-clad locks, but as tools that must be carefully calibrated.
In the case of restrictive covenants employment arrangements, the employer must consider:
- What business interest is being protected (e.g. customer list, trade secrets, key relationships);
- The nature of the role and how much access the employee had;
- The geographic or temporal scope of the restriction; and
I typically tell employers: if you cannot clearly explain what you are protecting, the clause is less likely to be upheld if challenged.
Drafting the clauses properly
Many small business contracts include generic non-competes that would be difficult to enforce. When you are drafting restrictive covenants employment clauses, you should tailor them. A one-size-fits-all clause will often be trimmed by a tribunal or court.
Key drafting tips include:
- Ensure the clause is clearly brought to the employee’s attention before they start or as part of their contract documentation;
- Define the business protected interest (e.g. “the clients with whom the employee dealt directly in the last 12 months” rather than “all clients”);
- Limit the restriction to a reasonable geographic area (often the UK or the specific region) and for a reasonable period (commonly 6-12 months rather than several years);
- Include a severability clause so if one part is struck out the rest can still stand; and
- Provide consideration (i.e. value) if the clause is introduced after employment begins (for example, a bonus or pay rise tied to that clause).
Tailoring in this way increases the chance your restrictive covenants employment clause will be upheld. If you counter-offer a broad clause without justification, you face the risk of unenforceability or unfair treatment complaints.
Using restrictive covenants employment clauses when someone leaves
When an employee leaves, several questions arise: do the restrictive covenants employment obligations activate; how do you enforce them; what process do you follow? Some employers rush to letters threatening injunctions, which can escalate matters unnecessarily.
Instead, I advise a staged approach:
- Review the contract and confirm whether the relevant restrictive covenants employment clause is in force;
- Check what the employee did during their employment—what client relationships they held, how much access they had to your business;
- Write to the employee summarising the clause, its start date, its duration and the specific business interest protected;
- If you propose enforcement (for example injunctive relief or financial claim), seek legal advice early because such actions can be costly;
One of my clients pursued a former salesperson for breach of a non-solicitation clause. The company had not updated its client list or recorded which clients the salesperson had handled. Because their evidence was weak, the former employee contested the covenant and the case settled unfavourably. That highlights why management of restrictive covenants employment must begin long before someone leaves.
Limitations and enforcement of clauses
Even well-drafted restrictive covenants employment clauses have limitations. Enforcement may depend on whether the clause restricts a worker or an independent contractor. Also, tribunals will examine whether the restriction is going further than necessary to protect your business interest.
Key considerations include:
- Is the clause overly broad and affecting the employee’s ability to find work? If yes, it may be struck out;
- Has the employer taken significant steps to support the employee’s transition into the restricted period (such as providing clear instructions or alternatives)? Possibly reducing the perceived unfairness;
- Has new business changed so much since the contract was signed that the protected interest no longer exists or is different? This may weaken your position;
- Is the timing of enforcement reasonable? Delay in acting may weaken your case under the doctrine of waiver or estoppel.
Integration with other employment obligations and best practice
Restrictive covenants employment clauses do not exist in a vacuum. They interact with other employment obligations—such as paying statutory redundancy, consultation duties, unfair dismissal law and data protection. It is wise to view your contract terms alongside your wider employment framework.
For example, if you bring in a restrictive covenant during a probation extension without explanation, you may give the impression of unfair treatment. If you enforce a covenant but still pay a long notice period, the balance between your obligations and your restrictive clause may come under scrutiny.
There are also best practice steps you can take to improve your position:
- Keep accurate records of who dealt with which clients and when;
- Maintain an up-to-date confidential information register;
- Restrict access to key systems once notice has been given;
- Use exit interviews to remind departing staff of their covenant obligations; and
- Conduct regular reviews of your contracts and covenant clauses to ensure they remain valid and reasonable.
Looking ahead, the legal landscape around restrictive covenants employment is evolving. Courts and tribunals continue to refine what “reasonable” means in practice.
When you treat restrictive covenants employment clauses as part of your wider employment strategy—and not just as an afterthought—you reduce your risk and support better outcomes when staff move on.