Restrictive Covenants
in an Employment
Contract
As Featured In
If your employees have access to confidential information or client details that are essential to your business, you must prevent them from using those details after leaving. We regularly help employers create reasonable, enforceable restrictive covenants to protect them from competition.
What is a Restrictive Covenant?
A restrictive covenant is a clause in an employment contract that limits the actions of an employee when they leave your company. As that departing employee had access to confidential information, clients, and other employees, they threaten your business interests. A restrictive covenant prevents them from acting in a way that damages your operations and profits for a reasonable period, typically six months.
We use restrictive covenants to protect your business from misuse of company information and contacts. When an employee leaves, they take their knowledge of your operations. However, by enlisting our support, you can create an employment contract that prevents them from capitalising on this knowledge, maintaining your market share.
What Restrictive Covenants Can You Include in Employment Contracts?
We can draft, implement and enforce various restrictive covenants to protect your business. When you come to us, our experts will analyse your situation and recommend the best solutions to your issues and concerns, ensuring that departing employees cannot take advantage of your company. We regularly use:
Non-Disclosure Restrictive Covenants
Employees often have access to confidential information that could harm your business if disclosed or misused after they depart. A non-disclosure agreement protects you from these hazards.
Non-Dealing Restrictive Covenants
A non-dealing agreement prevents a departing employee from working with your clients and subsequently competing with your company.
Non-Solicitation Restrictive Covenants
Solicitation involves a former employee persuading clients to move away from your business. A non-solicitation restrictive covenant prevents this process.
Non-Poaching Restrictive Covenants
With a non-poaching covenant in place, a departing employee cannot encourage your other employees to leave and join a new business. This covenant only applies to colleagues that the employee had meaningful contact with recently, as defined by the covenant.
Non-Compete Restrictive Covenants
A non-compete restrictive covenant prevents employees from joining a business in a role that competes with you. It is the most restrictive covenant and can be tough to enforce.
Non-Employment Restrictive Covenants
If a non-employment covenant is in effect, a former employee cannot be involved in recruiting employees from your company. As with the non-poaching covenant, this restriction is only applicable to employees that had had meaningful contact recently.
When are Restrictive Covenants Used and Enforced?
For a court to rule in your favour and enforce a restrictive covenant after a breach, they must believe that it is in place to protect your legitimate business interests, including but not limited to trade secrets, confidential information, client details and workforce stability. The court will also need to rule that the covenant is of a reasonable length, relevant to the specific circumstances and seniority of the role, and applies to a limited enough geographic area.
Finally, they will analyse whether the employee had access to confidential information, the typical loyalty of customers in that sector, standard industry practices regarding restrictive covenants and whether it was a reasonable covenant when the employee signed the employment contract.
When we draft your covenants, we recommend the ideal specifics to ensure that a court will rule in your favour and your information will remain secure. We have helped dozens of employers walk the line of protecting your company and business without creating a covenant that is too broad to enforce. With our litigation experience, we can represent you before the court to prove these requirements.
Garden Leave, Redundancy and Restrictive Covenants
You can use restrictive covenants and garden leave to protect confidential information and clients. We can write garden leave clauses into your employment contracts to maintain distance from departing employees during their notice period, preventing them from accessing clients or crucial information. It will also give you adequate time to hire and onboard a new employee before your old employee has actually left.
Restrictive covenants also apply when you are making employees redundant. Our team can protect your business when legally making employees redundant by writing and implementing non-compete, non-disclosure and non-solicitation restrictive covenants to shield your interests. Plus, if you need to enforce them, we are well-prepared to represent you in court.
Trust Our Solicitors
Throughout our extensive experience working with employers, we have seen almost every issue arising from restrictive covenants, meaning we can deal with anything you face. We learn about your situation and business, then use our market knowledge to advise the best strategies. When you have all the information and make a decision, we draft your covenants with pre-existing solutions that prevent future problems.
However, sometimes you need to enforce a restrictive covenant. Don’t worry. Our litigation experts can represent you and protect your interests before a judge. We offer you:
- 50+ years of experience practising employment law
- Commercially focused approach
- Clear support and advice without complex legal jargon
- Legal 500 Law Firm
- Employment lawyers based in London, Birmingham and Northampton
Draft Restrictive Covenants Today
For assistance drafting, implementing and enforcing restrictive covenants in employment contracts, speak to our friendly team of experts today. We can explain our services further, answer any questions and arrange a free no-obligation consultation to get you started.
FAQ
What are restrictive covenants in employment contracts?
Restrictive covenants are clauses in employment contracts that limit a departing employee’s actions to protect their employer’s interests once they have left the business.
What are the common types of restrictive covenants in employment contracts?
The most common restrictive covenants in employment contracts are non-compete, non-disclosure, non-dealing, non-solicitation, non-poaching and non-employment.
Is my restrictive covenant legally enforceable?
For a court to enforce a restrictive covenant, they must believe that it is an appropriate length, relevant to the employee’s role, seniority, and access and limited to a specific geographic area. You also need to prove that it reflects the loyalty of clients in your industry, matches standard industry practices and was reasonable when the employee signed the contract.
How long are employment restrictive covenants in effect?
Every restrictive covenant has a different duration, depending on the company and the employee. Typically senior employees will have longer covenants, though the most common are three and six months.
Can an employer enforce a 12-month restrictive covenant?
A court will assess each case individually and pay close attention to the specified time frame. However, they are often reluctant to enforce covenants that are over twelve months long. Hence, three and six-month covenants are far more common in the market.
Qarrar Somji
Solicitor-Advocate
Qarrar qualified as a Solicitor Advocate in 2014 having previously had experience in a varying range of litigation roles.
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