Restrictive Covenant Clauses
This collection contains additional restrictive covenant clauses and a related letter, for use alongside employment agreements where you need to protect the business from specific competitive risks after employment ends.
When are restrictive covenant clauses typically used?
The appropriate level of restriction will depend on the employee’s seniority, responsibilities and their level of contact with customers, suppliers and other staff. Employers often use restrictive covenants to limit the extent to which an ex-employee can compete with them.
Choosing the right restrictive covenant clause
The Non-Compete Covenant Clause is intended to restrict an ex-employee from competing with the employer after employment ends, subject to appropriate limits.
The Non-Solicitation Covenant Clause is aimed at restricting contact with customers or clients. The Non-Poaching Covenant Clause is intended to restrict the poaching of staff.
What do these clauses aim to restrict?
Restrictive covenant clauses can be used to try to prevent an ex-employee from, for example, working in a specific geographical area, contacting customers or clients, or poaching staff.
Enforceability and reasonableness
Because these clauses operate as a restraint of trade, it is important to apply reasonable limitations so they have the best chance of being enforceable as a legitimate means to protect the employer’s business interests.
The collection also includes a Non-Compete Letter for use alongside the restrictive covenant clauses where appropriate.
Restrictive Covenant Clauses is part of Employment. Just £38.50 + VAT provides unlimited downloads from Employment for 1 year.
Frequently Asked Questions
I want to stop a departing employee competing with us. Which of these clauses do I need? +
That depends on the specific risk you are trying to address. The Non-Compete Covenant Clause aims to prevent an ex-employee from working for a competitor or setting up a competing business for a defined period. The Non-Solicitation Covenant Clause targets contact with your customers or clients. The Non-Poaching Covenant Clause restricts the poaching of your staff. You may use more than one, tailored to the employee's role and seniority, and the Non-Compete Letter is available to use alongside them where appropriate.
Will a restrictive covenant clause actually be enforceable if an employee ignores it? +
Not automatically. Under English law, post-termination restrictive covenants are treated as restraints of trade and are void by default. To have any chance of enforcement, a clause must protect a legitimate business interest (such as confidential information, client relationships or workforce stability) and go no further in scope, duration and geography than is reasonably necessary to protect it. Courts will not rewrite a poorly drafted clause. Because enforceability is assessed case by case and depends heavily on the employee's role and seniority, legal advice on drafting is strongly recommended.
How do I decide whether to use a non-compete clause or a non-solicitation clause? +
Match the clause to the actual risk. A non-solicitation clause, restricting an ex-employee from approaching your customers or clients, is narrower and courts accept it more readily. A non-compete clause, preventing them working for a competitor or setting up a competing business at all, is the broadest, hardest to enforce and most closely scrutinised. If non-solicitation would adequately protect your client relationships, a non-compete covering the same ground may be considered wider than necessary and struck down. Consider both only where the risk genuinely justifies it.
Can I add a restrictive covenant clause to an existing employee's contract, or does it only work in a new contract? +
You can add a restrictive covenant clause to an existing employee's contract, but you must provide fresh consideration for it to be binding in England and Wales. An offer of employment and the associated salary is enough consideration when the clause is included in the original contract. If you introduce new restrictions later, continued employment alone is not sufficient: you will need to provide something additional, such as a pay rise, a bonus or a promotion. Without adequate consideration, the new clause is unlikely to be enforceable.
Should I use separate restrictive covenant clauses or rely on the restrictions already in the main employment contract? +
Use separate, independently drafted clauses as additional restrictions alongside your main employment agreement, not as replacements for general contractual terms already in place. This is good practice because if one clause is challenged and found unenforceable, a court can more easily sever it without disturbing the remaining restrictions. The clauses in this Simply-Docs collection are designed for this purpose. Which to use depends on each employee's seniority, their access to customers, suppliers and confidential information, and the specific competitive risk you are managing.
