Non-Compete Clause in UK Contracts: What It Means & Example Wording

When to Include a Non-Compete Clause

• When an employee or director has access to commercially sensitive information, trade secrets, or proprietary methods that could benefit a competitor
• When a senior employee has built strong personal relationships with key clients that could be exploited if they joined a rival firm
• When a shareholder is selling their stake in a business and the buyer needs protection against the seller immediately setting up in competition

Example Wording

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Non-Compete Clause Enforceable in the UK?

UK courts treat non-compete clauses as prima facie void as a restraint of trade. They will only be upheld if the employer can prove the clause protects a legitimate business interest and goes no further than is reasonably necessary in terms of duration, geographical scope, and the activities restricted. Courts regularly strike down clauses that are too broad. The landmark case of Tillman v Egon Zehnder [2019] UKSC 32 confirmed that courts can sever unenforceable parts of a non-compete clause (blue pencil test) rather than voiding it entirely, but only where the offending words can be removed without changing the meaning of the remaining clause.

Common Mistakes

• Setting the restricted period too long — UK courts rarely enforce non-competes beyond 12 months, and 6 months is far more likely to be upheld
• Failing to define the geographical scope or making it unreasonably wide — a nationwide restriction for a business that only operates in one city will likely fail
• Using identical non-compete clauses for all employees regardless of seniority — a clause appropriate for a director may be disproportionate for a junior employee