Post Termination Restrictive Covenants

Restrictive covenants are clauses in employment contracts designed to protect the legitimate interest of a business by restricting the activities of employees both during the employment and after it has come to an end.

Restrictive covenants can be beneficial for both employers and employees. Well-drafted restrictive covenants give clarity to both parties, helping to reduce the risk of disputes and misunderstandings.

In order to be enforceable they must be a reasonable, necessary and proportionate means of protecting a legitimate business interest. Overly broad or generic clauses may be deemed unenforceable by the courts.

The usual types of restrictive covenants used in employment contracts include:

• Non-compete clauses to prevent an employee from working for a direct competitor or setting up a competing business for a specific period after leaving the employer. These may be limited geographically to the region or market where the employer operates, and may be restricted to the specific business area that the employee was involved in.

• Non-solicitation clauses to prevent an employee from soliciting the employer’s clients, customers, or suppliers post-termination. These may be limited to clients, customers or suppliers that the employee dealt with during their employment.

• Non-dealing clauses to prevent an employee from dealing with the employer’s clients, customers or suppliers regardless of who initiated contact. Again, these may be limited to clients, customers or suppliers that the employee dealt with during their employment.

• Non-poaching clauses to prevent an employee from poaching or soliciting other employees to leave the employer and join a competitor or their new business. These may be limited to employees that the individual worked with or managed during their employment.

• Confidentiality clauses to protect the employer’s confidential information, trade secrets, and proprietary knowledge from being disclosed or used by the employee after leaving the business. These may be limited to the confidential information that the employee had access to during the employment but are usually unlimited in duration provided that the information remains confidential.

• Garden leave clauses to enable the employer to require the employee to stay away from work during their notice period, preventing them from starting a new role or engaging in competitive activities.

The consequences of a poorly drafted restrictive covenant can be costly for all parties, particularly if their lead to legal disputes and claims. Employers should ensure that restrictions are tailored to specific roles, while employees should understand their rights and obligations before agreeing them.

Contact our specialist post termination restrictive covenant solicitors

The Employment Team at O’Donnell Solicitors has extensive experience on advising on the negotiation, interpretation and enforcement of post termination restrictive covenants. We offer a personalised approach tailored to your specific needs and circumstances. In all cases we provide clear explanations of the process, costs and potential outcomes. 

For employees, we can help you to review restrictive covenants before signing an employment contract, guide you on seeking clarification or negotiating terms if proposed covenants are overly restrictive, and provide legal advice on the enforceability of a covenant.

For employers, we will help you to develop enforceable restrictive covenants specific to job roles, review and update them where appropriate, and provide advice on their enforceability in specific situations.

If you would like to speak to one of our specialist solicitors about post termination restrictive covenants, please contact the Employment Team at 01457 761 320 or e-mail enquire@odonnellsolicitors.co.uk.