Restrictive Covenants in Employment Contracts


Is your business protected against the risk of employees leaving and then competing against it? Being unaware of the benefits offered by restrictive covenants in employment contracts or using inappropriate covenants could cost your business as competitors encroach on long-standing customers and/or take your best people. Cambridge employment lawyer Nick Sayer explains.

Restrictive covenants are also known as post-termination restrictions. In short, they are clauses in a contract of employment designed to protect your business when an employee leaves.

Restrictive covenants in employment contracts

These clauses tend to cover a range of scenarios including:

  1. Competing with the previous employer
  2. Soliciting business from the clients of the previous employer
  3. Dealing with clients of the previous employer
  4. Poaching key members of staff from the previous employer.

The attitude of the courts towards enforcement of restrictive covenants is that they are invalid as being in restraint of trade unless they go no further than is reasonable to protect an employer’s legitimate business interests.

Are your current restrictive covenants poorly drafted and putting your business at financial risk?

In short, careful drafting is needed to ensure restrictive covenants in employment contracts are not viewed as being in restraint of trade. They are very technical clauses and it is very easy to get them wrong. A qualified employment law solicitor will be able to ensure they are drafted narrowly.

Contact us for advice on what should be included in your staff's employment contracts. Each business is different, but you will need to consider:

  • The business interest you are seeking to protect
  • Length of restricted period
  • The type of information that is considered confidential
  • The suitability of the restrictions in relation to each individual’s role and responsibilities (one size rarely fits all).

Act now to prevent future issues and save money in the long term. 

It is easy to fail when it comes to restrictive covenants - your business may currently be at risk.

Getting a review of what you have in place does not have to be expensive and it is more cost-effective to get advice before a problem arises. It also provides peace of mind so you can get on with your job.

Employment law issues such as restrictive covenants link into wider areas related to business protection such as an ex-employee stealing company data and/or intellectual property and using it with a new employer to compete unlawfully. For help, contact our team of discreet, professional experts with over 45 years of experience who can help prevent and resolve matters of this type, including experience in electronic investigations and disclosure.

For further information

Please contact Nick Sayer (Cambridge) on 01223 411421 or email nsayer@woodfines.co.uk.

If you have enjoyed this article, read our blog post Jeremy Clarkson and restrictive covenants.