Restrictive covenants (also known as post termination restrictions) are clauses commonly included in employment contracts and settlement agreements.
They are designed to protect an employer’s legitimate business interests after employment ends—particularly where an individual has had access to sensitive commercial information or key relationships.
What are restrictive covenants?
Depending on the wording, a restrictive covenant may limit a former employee from:
- Joining a competitor or setting up a competing business
- Approaching or dealing with clients, customers, or suppliers
- Recruiting colleagues to move to a new business
- Using or disclosing confidential information.
Restrictive covenants can also sit alongside (or overlap with) confidentiality obligations, which may continue long after employment has ended.
The most common restrictive covenants include:
- Non-compete clauses – A non-compete clause seeks to prevent a former employee from working for a competitor (or operating a competing business) for a specified period
- Non-solicitation clauses – A non-solicitation clause restricts the former employee from approaching or soliciting certain clients, customers, or suppliers
- Non-dealing clauses – A non-dealing clause aims to prevent the former employee from doing business with former clients/customers/suppliers—even if the client approaches them first
- Non-poaching clauses – A non-poaching (or non-recruitment) clause is designed to prevent the former employee from recruiting colleagues away from the previous employer.
Restrictive covenants are often used for senior employees and directors, but they can apply more widely, including to contractors and junior staff—particularly where there is access to confidential information or key relationships.
Are restrictive covenants enforceable?
Restrictive covenants are not automatically enforceable. For a covenant to be upheld, an employer typically needs to show it is:
- Protecting a legitimate business interest, and
- Reasonable, necessary, and no wider than required in scope.
When assessing enforceability, courts may consider factors such as the employee’s role, seniority, and influence, the length of the restriction, any geographical limits and whether the restriction reflects accepted practice in the relevant industry.
What happens if a restrictive covenant is breached?
If an employer believes a restrictive covenant has been breached (or is about to be breached), they should write to the ex-employee in the first instance and set out the reasons (with evidence) may seek legal remedies such as:
- An injunction to prevent the breach or limit ongoing damage
- Damages where a financial loss can be proven.
Employees may also challenge restrictive covenants where the restrictions are unclear, overly broad, or unfairly limit their ability to earn a living.
Early advice is essential—particularly where there is a risk of urgent court action.
How we can help
We have a great deal of experience with disputes involving restrictive covenants. Usually the starting point would be for us to review your current restrictive covenants to ensure they provide sufficient protection. If they do not provide protection (because they would be unenforceable) we can redraft these and advise you on how you may be able to incorporate these updated clauses into your key employee contracts of employment.
In cases where the employee has left your business and is soliciting your customers or clients we can help you to:
- Act quickly to protect confidential information and client relationships
- Send a warning letter to the ex-employee about any suspected breach of their restrictive covenants
- Pursue injunctive relief where appropriate and proportionate
- Support negotiations to resolve disputes commercially where possible.
Frequently asked questions
Below we answer some frequently asked questions that our Dispute Resolution team receive in relation to matters concerning restrictive covenants.When could a covenant be unenforceable?
How long can a restrictive covenant last?
What is the difference between non-solicitation and non-dealing?
Can we stop an ex-employee from working for a competitor?
What should I do if I believe an ex-employee is contacting my customers / clients?
