Restrictive Covenants in Employment Contracts in the UK: What to Know

If you’ve ever had a great employee leave and immediately start working for a competitor (or take your customers with them), you’ll know how quickly that can turn into a serious business problem.

That’s where restrictive covenants can help. When they’re drafted properly and used in the right situations, they can protect your client relationships, confidential information, and the stability of your team.

But there’s a catch: restrictive covenants aren’t automatically enforceable just because they’re written into an employment contract. In the UK, post-termination restrictions only work if they’re fair, targeted, and genuinely necessary to protect your legitimate business interests.

Below, we break down what restrictive covenants are, the most common types, what makes them enforceable, and how to build them into your contracts in a way that’s practical for a small business.

What Are Restrictive Covenants (And Why Do They Matter For Small Businesses)?

In simple terms, a restrictive covenant is a clause in an employment contract that limits what an employee can do after they leave your business.

They’re usually used to stop a former employee from:

• setting up in competition with you straight away,
• poaching your customers or suppliers,
• approaching (or hiring) your staff, or
• using your confidential information to benefit someone else.

From a small business perspective, restrictive covenants can be especially valuable because your business may rely heavily on a few key relationships or a tight-knit team. If someone leaves with your client list, pricing strategy, or sales pipeline, that can have an outsized impact.

That said, UK law generally supports an employee’s right to earn a living. So restrictive covenants have to strike a balance: protect your business, without being overly broad or punitive.

As a starting point, these clauses are typically included in an Employment Contract (and sometimes in separate agreements for senior staff).

When Should You Use Restrictive Covenants (And When Might They Backfire)?

Not every role needs restrictive covenants. If you try to use heavy restrictions for every employee “just in case”, you can end up with clauses that:

• are harder to enforce,
• create unnecessary friction in hiring negotiations, and
• give you a false sense of security (because they look strong on paper but don’t hold up in practice).

Roles Where Restrictive Covenants Are Often Worth Considering

Restrictive covenants are commonly used where an employee has real ability to harm your business if they leave, for example:

• sales and business development roles with strong client relationships,
• senior leadership (directors, heads of department, senior managers),
• technical or product roles with access to valuable know-how or strategy,
• operations roles with access to supplier terms and pricing, or
• roles with influence over your team (where staff poaching is a realistic risk).

Common Situations Where Restrictive Covenants Can Backfire

Restrictive covenants can cause issues if:

• you use the same “template” restrictions for every employee without tailoring them,
• you impose a long non-compete period when a narrower clause (like non-solicitation) would do the job,
• you don’t keep the contract updated as the employee’s responsibilities grow, or
• you rely on restrictions as a substitute for strong internal systems (like confidentiality processes and access controls).

A practical approach is to treat restrictive covenants as one layer of protection - not the only layer.

Types Of Restrictive Covenants To Consider In The UK

There isn’t just one kind of restrictive covenant. In fact, the best approach is usually to choose the lightest restriction that still protects your business.

Here are the most common types of restrictive covenants in UK employment contracts.

1) Non-Compete Clauses

A non-compete clause tries to stop a former employee from working for (or setting up) a competing business for a certain period after leaving.

This is usually the most aggressive restriction, and therefore the most difficult to enforce unless it’s clearly justified and limited in time, scope, and geography.

If you’re considering longer non-competes, it’s worth sanity-checking how reasonable your proposed restrictions are (particularly for senior roles). This often comes up with Non-Compete Clauses and whether the business can justify that length.

2) Non-Solicitation Of Customers (Or Suppliers)

A non-solicitation clause prevents an ex-employee from approaching your customers, prospective customers, or suppliers for a certain period.

For many small businesses, this is one of the most commercially useful restrictions, because it targets the real risk: losing relationships the employee built while working under your brand.

3) Non-Dealing Clauses

A non-dealing clause goes one step further than non-solicitation. It prevents a former employee from dealing with certain clients (even if the client approaches them first).

Because it’s broader, it may be harder to enforce unless it’s drafted very carefully and limited to relevant clients (for example, those the employee had material contact with).

4) Non-Poaching Of Staff (Non-Solicitation Of Employees)

This clause aims to prevent a departing employee from encouraging your staff to leave and join them.

For small teams, even one or two departures can cause major disruption. A well-drafted staff non-solicitation clause can help reduce that risk.

5) Confidentiality Clauses (Not Always A “Restrictive Covenant”, But Still Essential)

Confidentiality obligations often apply during employment and after employment ends. While confidentiality clauses aren’t always called “restrictive covenants” in a strict sense, they’re closely related and often enforced more readily if they’re clear and practical.

Confidentiality works best when you also have operational protections in place (for example: access control, password policies, and clear classification of confidential documents).

Are Restrictive Covenants Enforceable In The UK? The Practical Test Businesses Need To Meet

This is the big question: will your restrictive covenants actually be enforceable?

In the UK, post-termination restrictions are generally only enforceable if they:

• protect a legitimate business interest, and
• go no further than reasonably necessary to protect that interest.

Put another way: you need to be able to explain why the clause exists, and why you’ve chosen that particular scope (time, geography, and activities restricted).

What Counts As A “Legitimate Business Interest”?

Common examples include:

• customer connections (where the employee has strong influence over clients),
• confidential information and trade secrets,
• workforce stability (protecting your team from poaching).

Trying to restrain competition just because you don’t want competition generally won’t be enough.

What Makes A Covenant “Reasonable”?

Reasonableness usually comes down to:

• Duration: Is the restriction for weeks, months, or a year? Shorter is usually safer, but it depends on the role and the risk.
• Geography: Is it limited to a sensible area, or does it try to cover the whole UK (or the world) without justification?
• Scope of restricted activities: Does it narrowly target competing activity, or does it prevent the person from working in their industry at all?
• Seniority and access: How much influence did the employee actually have over clients, strategy, and sensitive information?

One key point business owners sometimes miss: enforceability is assessed based on what was reasonable at the time the covenant was agreed. If an employee started junior and then grew into a senior role, you may need updated covenants (typically through an updated contract or variation, with proper consideration).

Don’t Forget The “People” Side Of It

Even enforceable restrictive covenants can be difficult to police if your offboarding process is messy. Your best outcome usually comes from:

• clear contracts,
• solid internal confidentiality practices, and
• a structured exit process that reminds employees of their obligations.

How To Draft Restrictive Covenants That Actually Protect Your Business

Drafting restrictive covenants isn’t about throwing in the harshest possible terms. It’s about making sure the clauses are tailored, clear, and tied to real risks.

If you’re building (or updating) your employment paperwork, it helps to work through a checklist like the one below.

A Practical Drafting Checklist

• Identify what you’re protecting: clients, confidential info, staff, supplier terms, pipeline, pricing, etc.
• Match the covenant to the risk: if client poaching is the risk, you may not need a non-compete.
• Define the “restricted” clients properly: for example, clients the employee dealt with in the last 6–12 months.
• Keep time periods realistic: ask what time period you genuinely need to protect relationships or confidential strategy.
• Use clear definitions: vague terms like “competitor” or “client” can cause disputes later.
• Consider promotion points: build a process to review restrictive covenants when someone’s role changes.
• Make sure the rest of the contract supports the covenant: duties around confidentiality, IP, and return of property should align.

Link Restrictive Covenants To Your Wider Employment Framework

Restrictive covenants work best when they sit inside a well-structured employment setup. For example:

• During onboarding, it helps to set expectations early (many businesses formalise this during Probation Periods and early performance reviews).
• If performance issues arise, you can reduce the risk of a messy exit by managing the process properly through PIPs and documented communication.
• If you invest heavily in training, you might also consider separate protections (where appropriate) like Training Cost Repayment Clauses (these are different to restrictive covenants, but they’re often part of the same broader risk conversation).

And if you’re thinking about standalone documents (rather than relying only on a contract clause), a properly drafted non-compete agreement can sometimes be appropriate for senior hires or key staff - but it still needs to meet the same enforceability principles.

What Should You Do When An Employee Leaves (And You’re Worried About Competition)?

This is where restrictive covenants become real. The employee resigns, and you’re concerned they might:

• join a competitor,
• start a competing business, or
• take clients or staff with them.

Before you jump straight into threats of legal action, it’s usually worth taking a calm, structured approach.

Step 1: Check What You Actually Have In Writing

Start by reviewing the signed contract (and any updates). Confirm:

• which restrictive covenants apply,
• how long they last,
• who/what they cover (clients, staff, suppliers), and
• whether confidentiality clauses also apply post-termination.

Step 2: Gather The Facts (Without Overreaching)

It’s one thing to suspect someone is poaching clients - it’s another to have evidence. Document what you know, for example:

• client messages suggesting they’ve been contacted,
• LinkedIn updates showing a move to a direct competitor,
• unusual downloads or forwarding of documents (where you have appropriate policies in place and you’re complying with privacy and data protection requirements),
• staff reporting they’ve been approached.

Be careful not to take steps that create a separate legal issue (for example, mishandling personal data or breaching privacy rules). If you’re unsure, get advice early.

Step 3: Communicate Clearly (And Professionally)

Often, the fastest resolution is a clear written reminder of obligations. This might include:

• a reminder of the relevant restrictive covenants,
• confirmation that they must return company property and confidential information, and
• a request for written undertakings (in appropriate cases).

The tone matters. If you overstate what the contract says or make unrealistic demands, it can escalate the situation (and weaken your position).

Step 4: Get Legal Advice Before Enforcing

If the risk is serious - for example, a senior employee leaving with key client relationships - it’s worth getting advice quickly on:

• whether the restrictive covenant is likely enforceable,
• what evidence you’ll need, and
• what the best strategy is (commercial resolution vs formal enforcement).

In some situations, businesses consider urgent court action (like an injunction). That’s not always the right first move, but where the commercial damage could be immediate, early advice can make a big difference.

Key Takeaways

• Restrictive covenants are clauses that limit what an employee can do after they leave, designed to protect your clients, confidential information, and team.
• They’re only enforceable in the UK if they protect a legitimate business interest and go no further than reasonably necessary.
• Common restrictive covenants include non-compete, non-solicitation, non-dealing, and staff non-poaching clauses.
• The best restrictive covenants are tailored to the employee’s role and the real risks to your business - not copied and pasted from a generic template.
• Review restrictive covenants when an employee’s role changes, especially after promotions, to avoid outdated clauses that don’t match their responsibilities.
• If an employee leaves and you’re concerned about competition, take a structured approach: check the contract, gather facts, communicate clearly, and get advice before escalating.

Disclaimer: This article is general information only and does not constitute legal advice. If you need advice on your specific situation, speak to a qualified professional.

If you’d like help drafting or reviewing restrictive covenants so your business is protected from day one, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.