Restrictive covenants for employers: how to make them enforceable

What restrictive covenants do

Restrictive covenants, also called post-termination restrictions, are terms in an employment contract that limit what an employee can do for a period after they leave. They protect what a departing employee could otherwise take with them: relationships with clients and suppliers, knowledge of pricing, margins and plans, and influence over colleagues. They matter most for people in client-facing, sales and senior management roles.

Because they restrict a person's freedom to work, the courts start from the position that they are unenforceable. A covenant will be enforced only if the employer shows that it protects a legitimate business interest and is no wider than reasonably necessary to protect that interest, and the burden of proving both points is on the employer. Covenants are enforced in the county court or the High Court, usually by applying for an injunction or claiming damages, and in those courts the losing party generally pays the winner's legal costs.

The main types of covenant

A non-compete covenant stops the former employee working for a competitor, or setting up a competing business, for a period and sometimes within a defined area. It gives the widest protection and is the hardest to enforce, because it can keep someone out of work in their own field. A government consultation in 2020 noted that courts tend to enforce non-compete restrictions of up to 12 months, depending on the seniority of the employee and their access to confidential information and clients, and the government's 2025 working paper said that under current law a non-compete of more than 12 months is only likely to be found reasonable in exceptional circumstances. For most roles, a much shorter period is easier to justify.

A non-solicitation covenant stops the former employee approaching clients or customers to take their business, usually limited to clients they dealt with or were responsible for during a set period before leaving. A non-dealing covenant goes further and stops them doing business with those clients even if the client makes the first approach. It is useful where clients tend to follow an individual, but it restricts more and so needs stronger justification. A non-poaching covenant stops them recruiting colleagues to join them, and is easier to defend when it is limited to senior employees or people they worked with. Some contracts also restrict dealings with key suppliers.

Confidentiality clauses work differently. They protect information rather than restricting who the former employee can work for or deal with. A well-drafted contract uses both, because it can be hard to prove that information someone carries in their head has been misused.

What makes a covenant reasonable

Reasonableness depends on the facts. A court asks what interest the employer is protecting and whether the restriction goes further than is needed to protect it. Useful questions to ask when drafting are what the employee's role and seniority are, which clients and information they have access to, how long it would take a replacement to build a relationship with those clients, and for how long the information would be of use to a competitor.

Precision makes a covenant easier to defend. A client covenant limited to clients the employee dealt with in the last 12 months before leaving is easier to justify than one covering every client of the business. A non-poaching covenant limited to senior colleagues or those the employee managed is easier to justify than one covering every member of staff. A geographical limit can make sense for a business that trades locally, but it may be irrelevant, or far too wide, where clients are served nationally or online.

A court will not rewrite a covenant that is too wide. In Tillman v Egon Zehnder Ltd [2019] UKSC 32, the Supreme Court held that a court can remove unenforceable words from a covenant, but only if they can be deleted without adding to or changing the wording that remains, the remaining terms are still supported by adequate consideration, and removing them would not make a major change to the overall effect of all the post-employment restraints in the contract. It is for the employer to show that those conditions are met. Drafting separate, self-contained restrictions gives a court more options, but each restriction still has to be reasonable on its own terms.

Drafting and updating covenants

Tailor covenants to the role. A template copied from another business, or identical wording used for everyone from an administrator to a sales director, is likely to be too wide for some roles and to give too little protection in others. Decide what each covenant is protecting, set the length and scope to match, and define the key terms: which clients, which competing activities, and which period before leaving the restriction looks back over.

Review covenants when an employee is promoted or their role changes. A restriction written for someone's first job may not fit the role they hold years later, when they have more clients, more information and more influence over the team. New covenants for an existing employee should be agreed in return for something of value, such as a pay rise, a promotion or a payment, so there is no argument that the employee received nothing for accepting them. Any payment made for agreeing to a restriction is taxed as earnings.

If an employee refuses to accept new covenants, take advice before treating the refusal as grounds for dismissal. The government's factsheet on the Employment Rights Act 2025 says that from 1 January 2027, where an employer dismisses and re-engages an employee to change terms other than core terms such as pay and hours, a tribunal deciding whether the dismissal was fair will have to consider the consultation carried out and anything offered to the employee in return.

Use garden leave and covenants together. A garden leave clause lets you keep an employee away from clients and colleagues during their notice period while they remain employed and paid. Think about the total time someone will be kept out of the market, and include a term that reduces the length of the post-termination restrictions by any time spent on garden leave.

Protecting confidential information

The law of confidence prevents current and former employees from using their employer's trade secrets or confidential customer lists. An express confidentiality clause makes the position clearer by defining the categories of information the business treats as confidential, such as client details, pricing and margins, supplier terms, business plans and technical know-how, and by confirming that the obligations continue after employment ends.

The steps you take in practice matter as much as the contract. Limit access to sensitive information to the people who need it, mark confidential documents, control downloads and forwarding to personal email accounts, collect laptops, phones and documents when someone leaves, and remind departing employees in writing of their continuing obligations. If you later need to enforce a covenant or confidentiality clause, evidence of what the employee had access to, and what they took, will be central to the case.

No confidentiality clause can prevent a worker making a protected disclosure under whistleblowing law. Section 43J of the Employment Rights Act 1996 makes any provision in an agreement between a worker and their employer void in so far as it tries to do so.

What to do if a former employee breaches a covenant

Act promptly. Delay can count against an application to the court for urgent protection, and each week of inaction gives the former employee more time to move clients or colleagues.

Start by collecting the evidence: the signed contract and any later changes to it, what the employee had access to, their exit paperwork, and proof of the breach, such as messages to clients or colleagues, public announcements of their new role, or information from clients. Check that the covenant is likely to be found reasonable, and that nothing about the way the employment ended gives the former employee an argument that they are no longer bound. For example, if an employer ends the employment in breach of contract, such as without the notice the contract requires, the employee may argue that the covenants no longer apply. Make sure that any review of company devices and accounts is carried out lawfully.

The usual first step is a letter to the former employee, and often to their new employer, setting out the obligations, the evidence of breach and what you require: written undertakings to stop, to return any information and to explain what has happened. Undertakings given at this stage can resolve the matter without court proceedings. If they are not given, you can apply to the court for an interim injunction, which orders the former employee to comply until the case is decided. Unless the court orders otherwise, an interim injunction must include an undertaking from the employer to pay any damages the former employee suffers that the court considers the employer should pay, for example if it later turns out the injunction should not have been granted. The court can also award damages for losses the breach has caused.

Covenant disputes move quickly and are expensive, and the losing party usually pays a large part of the winner's costs. That is a reason to get the drafting right at the start, and to be realistic about which restrictions you would actually be prepared to enforce.

Recruiting someone bound by a previous employer's covenants

The same rules matter when you recruit from a competitor. A new recruit's former employer may try to enforce their covenants and may write to you as well as to them. Before making an offer to someone in a client-facing or senior role, ask to see the restrictions in their current contract and check their notice period, and take advice on whether the restrictions are likely to be enforceable.

If they are likely to hold, plan around them, for example by starting the person on work that does not involve their former clients, or by agreeing a later start date. Tell them in writing that they must not bring or use any confidential information belonging to their former employer, and make sure nobody in your business asks them to. Doing that from the start puts you in a much better position if the former employer later alleges that its information has been misused.

Proposed reform of non-compete clauses

On 26 November 2025 the Department for Business and Trade published a working paper on options to reform non-compete clauses in employment contracts. The options were a statutory limit on the length of non-competes, a limit that varies with the size of the employer, a ban, a ban for employees earning below a salary threshold, and a combination of a ban below a salary threshold with a statutory limit for higher earners. The paper closed for responses on 18 February 2026. It was intended to inform decisions about whether and how to take proposals forward, and it did not change the law.

Until any reform is made by legislation, the rules described above continue to apply. Because non-competes may become harder to rely on, it makes sense to protect the business through well-drafted non-solicitation, non-dealing, non-poaching and confidentiality clauses, and to reserve non-competes for roles where they are genuinely needed. If you are recruiting senior staff, reviewing contracts after a restructure or dealing with a departing employee, we can review your covenants and advise on enforcement. We agree the scope and cost of the work with you in writing before we start. For the contract as a whole, see our guide to hiring your first employee.

Frequently asked questions

Are non-compete clauses enforceable in England and Wales?

They can be, but only if the employer shows that the clause protects a legitimate business interest and is no wider than reasonably necessary to protect it. Courts look closely at the length and scope of the restriction and at the employee's seniority and access to clients and confidential information. The government's 2025 working paper said that under current law a non-compete lasting more than 12 months is only likely to be found reasonable in exceptional circumstances.

How long can a restrictive covenant last?

There is no fixed maximum. A covenant must last no longer than is reasonably necessary to protect the employer's legitimate interests, which depends on the role, the employee's seniority and their access to clients and confidential information. A government consultation in 2020 noted that courts tend to enforce non-compete restrictions of up to 12 months depending on those factors, but for most roles a shorter period is easier to justify.

Can I add restrictive covenants to an existing employee's contract?

Yes, with the employee's agreement, and it is sensible to review covenants when someone is promoted. Give the employee something of value in return, such as a pay rise, a promotion or a payment, so there is no argument that they received nothing for agreeing. Any payment for agreeing to a restriction is taxed as earnings. Dismissing someone for refusing new terms carries a risk of an unfair dismissal claim, so take advice before doing so.

Do restrictive covenants still apply if I dismiss the employee?

They can, but the way the employment ends matters. If an employer ends the employment in breach of contract, for example without the notice the contract requires, the former employee may argue that they are no longer bound by the covenants. Check the contract and the termination route before dismissing someone whose covenants you may need to enforce, and use a payment in lieu of notice or garden leave clause where the contract allows.

What can I do if a former employee is contacting my clients?

Collect evidence of the contact, check that the covenant is likely to be enforceable, and act promptly. The usual first step is a letter asking the former employee for written undertakings to stop, often copied to the new employer. If that does not work, you can apply to court for an interim injunction, normally giving an undertaking to compensate the former employee if the injunction proves unjustified, and you can also claim damages.

Is the government banning non-compete clauses?

No change had been made to the law as at September 2026. The Department for Business and Trade published a working paper on 26 November 2025 seeking views on options including a statutory limit on length, a ban, a ban below a salary threshold and a combined approach, and it closed on 18 February 2026. Until any reform is made by legislation, the existing common law rules continue to apply.

Sources & further reading

• The Supreme Court — Tillman v Egon Zehnder Ltd [2019] UKSC 32
• GOV.UK — Reform of non-compete clauses in employment contracts: working paper
• GOV.UK — Measures to reform post-termination non-compete clauses in contracts of employment
• legislation.gov.uk — Employment Rights Act 1996, section 43J
• Justice.gov.uk — Civil Procedure Rules, Part 25: interim remedies
• HMRC — EIM12975: payments in lieu of notice and gardening leave
• GOV.UK — Employment Rights Act 2025 factsheet: fire and rehire

This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 17 September 2026. AD Solicitors is a trading name of AD Solicitors Limited, a recognised body regulated by the SRA (no. 8011228).