16th April 2025
Restrictive covenants are an essential tool for employers to protect their business interests when an employee leaves the company. These contractual clauses can prevent former employees from engaging in activities that could harm the business, such as working for a competitor, soliciting clients, or using confidential information.
Sarah Everton, Head of Employment Law at Myers & Co, delves into how restrictive covenants can be effectively implemented and enforced, while ensuring they are reasonable and legally compliant.
Restrictive covenants are clauses in employment contracts that limit an employee’s actions during or after their employment ends. These covenants are designed to protect the employer’s business interests by preventing former employees from engaging in activities that could harm the business. There are several types of restrictive covenants, each serving a specific purpose:
Restrictive covenants are crucial for protecting your business’s commercial interests and managing risks when an employee leaves. They help prevent important information from being used and passed on by former employees and help prevent former employees from exploiting the organisation’s customer base and trade connections.
By including these clauses in employment contracts, you can deter employees from joining competitors and warn off potential new employers.
For a restrictive covenant to be enforceable in the UK, it must be reasonable in scope, duration, and geographical reach.
It must also protect a legitimate business interest. Courts will not enforce overly broad covenants that unfairly restrict an individual’s ability to work. Seeking legal advice is often necessary to ensure your business’s covenants are properly drafted and enforceable.
When drafting restrictive covenants, it is essential to ensure they are precise and reasonable. Here are some key considerations:
If a former employee breaches a restrictive covenant, you may need to take legal action to enforce it. This can involve seeking an injunction to prevent further breaches or claiming damages for any losses incurred.
It is crucial to act promptly and seek legal advice to navigate the enforcement process effectively.
Restrictive covenants are a vital tool for employers to protect their business interests when an employee leaves. By understanding the different types of covenants, ensuring they are reasonable and enforceable, and taking prompt action in case of breaches, you can safeguard your business effectively. At Myers & Co, we specialise in drafting and enforcing restrictive covenants tailored to your business needs.
For further information, please contact Sarah Everton Head of Employment on 01782 491025 or email sarah.everton@myerssolicitors.co.uk. Myers & Co has offices in Stoke-on-Trent, Staffordshire.
