Restrictive Covenant Enforceability
Restrictive covenants include non-compete, non-solicitation, non-dealing, and non-poaching clauses. Each must protect a legitimate business interest and be reasonable in scope. Non-dealing clauses are more likely to be enforced than non-competes as they are less restrictive.
Last updated: February 2025
What the Law Says
UK common law treats restrictive covenants as restraints of trade, enforceable only where they protect legitimate business interests (trade connections, trade secrets, workforce stability) and are no wider than reasonably necessary. The hierarchy of enforceability runs from non-dealing (most enforceable) through non-solicitation and non-poaching to non-compete (least enforceable). Following Tillman v Egon Zehnder (2019), courts can sever unenforceable parts.
Your Obligations as an Employer
- Ensure each covenant protects a specific legitimate business interest
- Tailor duration, scope and activities to the individual role
- Provide fresh consideration when adding covenants to existing contracts
- Enforce covenants consistently to maintain their credibility
What to Include in Contracts
Draft each covenant separately with defined scope, include a severance clause, specify the restricted period starting from termination date, define key terms (competitor, client, prospective client, key employee), and consider linking to garden leave to reduce the effective restriction.
View related contract templateCommon Mistakes
- Bundling all restrictions into one clause so the entire covenant fails if one part is unreasonable
- Not providing consideration when adding covenants after employment has started
- Defining 'competitor' too broadly to cover companies not actually in competition
FAQ
What is the difference between non-solicitation and non-dealing?
A non-solicitation clause prevents the ex-employee from actively approaching clients to take their business. A non-dealing clause prevents any business dealings with clients, even if the client approaches the ex-employee. Non-dealing is more restrictive but generally easier to enforce because it is simpler to prove a breach.
Do restrictive covenants survive if the employer breaches the contract?
If the employer commits a repudiatory breach of contract (e.g. constructive dismissal), the employee can accept the repudiation and argue the restrictive covenants fall away. However, this is not automatic and depends on the specific drafting and circumstances.
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Get Started FreeThis is guidance for UK employers, not legal advice. For complex employment law matters, consult a qualified employment solicitor or ACAS.
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