Employment Contract & Restrictive Covenants UK Guide

What this document is

An employment contract with restrictive covenants is a single document that does two jobs. The first part sets out the ordinary terms of employment: job title, duties, pay, hours, holiday, notice periods, confidentiality, and all the other day-to-day terms that govern the working relationship.

The second part introduces post-termination restrictions that continue to bind the employee for a set period after their employment ends. Common restrictions include non-compete clauses (limiting who the employee can work for next), non-solicitation clauses (preventing them from approaching your clients or customers), non-dealing clauses (a stronger version that stops them dealing with your clients even if the client approaches them), and non-poaching clauses (stopping them from recruiting your existing staff).

Because these clauses restrict a person's ability to earn a living, the courts treat them with caution. They are only enforceable where the employer can show a legitimate business interest worth protecting, and where the restriction goes no further than reasonably necessary to protect that interest.

How to use this document

1. Identify what actually needs protecting. Before drafting any covenant, work out what genuine business interests are at risk if this person leaves. Typical examples include client relationships, confidential pricing information, trade secrets, and a stable workforce. If you cannot articulate the interest clearly, a court is unlikely to enforce a clause built around it.
2. Match the restrictions to the role. A junior administrator rarely needs a twelve-month non-compete, whereas a senior salesperson with direct client contact might reasonably be restricted from approaching those clients for six to twelve months. Tailoring the clauses to the actual role and seniority is one of the strongest factors in whether the restrictions hold up later.
3. Set reasonable scope, duration and geography. Restrictions must be no wider than necessary. That means thinking carefully about how long the restriction lasts, what activities it covers, and any geographic limits. Overreaching on any one of these factors can cause the whole clause to fail, so err on the side of proportionality rather than maximum protection.
4. Provide the written statement on time. Under the Employment Rights Act 1996, employees and workers are entitled to a written statement of particulars from day one of employment. Building the contract properly from the outset means you meet this statutory obligation and capture the restrictive covenants at the point the employee is most willing to sign.
5. Review covenants when roles change. A covenant drafted for a junior role may become unenforceable once that person is promoted to a senior position with much greater client exposure. Refresh the contract at key transition points, such as promotions or significant pay rises, and consider what fresh consideration might be needed to make new covenants binding.

Common questions