How to Manage Restrictive Covenants
Manage restrictive covenants by reviewing them regularly to ensure they remain reasonable, enforcing them consistently when breached, ensuring new covenants are supported by consideration, and seeking injunctive relief promptly when a breach is discovered.
Last updated: February 2025
Step-by-Step Guide
Audit existing covenants across your workforce
Review all restrictive covenants in current employment contracts to check they are up to date, reasonable, and enforceable.
- •Pay particular attention to covenants that were drafted many years ago and may no longer reflect the business.
Ensure covenants are tailored to the individual
Restrictive covenants should reflect the employee's seniority, access to confidential information, and client relationships. One-size-fits-all covenants are harder to enforce.
- •Senior hires should have stricter covenants than junior staff.
Use garden leave as a complementary tool
Include a garden leave clause allowing you to keep the employee away from the business during their notice period, which reduces the practical need for post-termination restrictions.
- •Garden leave is generally easier to enforce than post-termination non-competes.
Enforce promptly and consistently
If a former employee breaches a covenant, act immediately. Delay in enforcement can be interpreted as waiver or acceptance.
- •Send a cease-and-desist letter within days of discovering the breach.
- •Consider seeking an interim injunction if the breach is serious.
Legal Requirements
Restrictive covenants in restraint of trade are void at common law unless they protect a legitimate business interest and are no wider than reasonably necessary. The employer bears the burden of proving enforceability. Courts assess reasonableness at the time the covenant was entered into, not at the time of enforcement.
Common Mistakes
Template / Example
When to Get a Solicitor
When drafting or updating covenants for key employees, and immediately when a breach is suspected. Speed is essential for obtaining injunctive relief.
FAQ
Are restrictive covenants enforceable if the employer terminates the employee?
Generally yes, unless the employer breaches the contract in a way that amounts to a repudiatory breach (e.g. wrongful dismissal without notice). In that case, the covenants may fall away.
Can restrictive covenants be enforced against a new employer?
You can seek an injunction against the new employer if they knowingly induced the breach of covenant, under the tort of inducing breach of contract.
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