Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Hiring great people is one of the best investments you can make as a small business.
But if a key employee leaves and immediately takes your customers, your staff, or your trade secrets with them, it can set your business back months (or longer). That’s where restrictive covenants in employment contracts can help.
In this guide, we’ll walk you through what a restrictive covenant in an employment contract actually is, the types UK businesses commonly use, and (crucially) when a court is likely to enforce it. We’ll also cover practical drafting tips so you can protect your business without accidentally creating a clause that’s too broad to be worth much at all.
What Is A Restrictive Covenant In Employment?
A restrictive covenant is a clause in an employment contract that limits what an employee can do either:
- during their employment (for example, not working for a competitor); and/or
- after their employment ends (for example, not approaching your clients for a period).
When people talk about restrictive covenants in employment contracts, they’re usually referring to post-termination restrictions (i.e. restrictions that apply after the employee leaves).
These clauses sit alongside other protective terms you’ll often include in an Employment Contract, such as confidentiality obligations, intellectual property provisions, and notice periods.
Are Restrictive Covenants Always Enforceable In The UK?
No. In UK law, restrictive covenants are generally treated with caution because they limit someone’s ability to work and earn a living. A covenant will usually be unenforceable unless you can show it:
- protects a legitimate business interest; and
- goes no further than is reasonably necessary to protect that interest.
This is often described as the “restraint of trade” principle in common law.
So the goal isn’t “lock the employee down so they can’t compete.” The goal is “protect what’s genuinely yours to protect” (like client relationships, confidential information, and key staff).
It’s also important to know that enforceability is highly fact-specific. Courts won’t usually “rewrite” an overbroad restriction to make it reasonable, so if it’s drafted too widely, you may lose the protection entirely.
Why Do Small Businesses Use Employment Restrictive Covenants?
If you’re running a small business, your risk is often concentrated. You might have:
- a small number of key client relationships;
- one or two employees with deep knowledge of your pricing, processes, or pipeline;
- a tight-knit team where poaching one person can trigger others to leave;
- proprietary know-how that isn’t patented (and is only valuable if it stays confidential).
In those situations, employment restrictive covenants can give you leverage and clarity. They can:
- deter “bad exits” (like immediately soliciting your customers);
- make it easier to resolve disputes early (because the obligations are written down);
- support you if you need to apply for an injunction (in serious cases); and
- help you show investors or buyers that you’ve protected goodwill and client connections.
That said, restrictive covenants work best when they’re part of a broader “legal foundations” approach, including clear policies and procedures for protecting information and managing exits (handover, device returns, access removal, etc.).
What Types Of Restrictive Covenants Are Common In Employment Contracts?
There’s no one-size-fits-all approach. The right restrictive covenants for an employment contract depend on the role, seniority, industry, and how your business wins and retains work.
Below are the most common types we see UK businesses use.
Non-Compete Clauses
A non-compete clause stops an employee from working for (or setting up) a competing business for a set period after their employment ends.
This is often the most “aggressive” restriction, and therefore one of the hardest to enforce unless it is carefully limited.
For example, a broad clause that bans someone from working in the entire industry across the whole UK for 12 months is more likely to be challenged than a clause narrowly focused on a specific market and timeframe.
If you’re considering longer restrictions, it’s worth understanding how courts view duration in practice, particularly around Non-Compete Clauses.
Non-Solicitation Of Clients (Or Prospects)
A non-solicitation clause usually prevents an ex-employee from actively approaching:
- your customers;
- your clients; and/or
- sometimes your “prospective” customers (for example, leads they worked with during their employment).
This is often more enforceable than a non-compete because it’s directly tied to protecting your customer relationships and goodwill, rather than stopping competition altogether.
Many small businesses find a well-drafted Non-Solicitation Clause provides strong protection without being overly restrictive.
Non-Dealing Clauses
A non-dealing clause goes a step further than non-solicitation. Instead of focusing on “approaching” your clients, it prevents the ex-employee from doing business with them at all (even if the client approaches the employee).
These can be useful if you have long-term client relationships and want to reduce the “it was their idea, not mine” grey area.
However, because non-dealing clauses are broader, they need careful drafting to stay reasonable and enforceable.
Non-Poaching / Non-Solicitation Of Staff
This restriction prevents an ex-employee from encouraging your team members to leave and join them (or a competitor). For a small business, losing one senior staff member is hard; losing a cluster at once can be critical.
These clauses often focus on employees the departing person worked with directly, and typically run for a shorter period than client restrictions.
Confidentiality Obligations (And Trade Secrets)
Strictly speaking, confidentiality clauses aren’t usually “restrictive covenants” in the same sense as non-compete, non-solicitation, or non-dealing clauses. However, they’re one of the most important post-termination protections you can have.
Confidentiality obligations usually apply both:
- during employment; and
- after employment ends (often indefinitely for true trade secrets).
If your concern is “they’ll take our playbook,” strong confidentiality provisions (plus practical controls like access management) can sometimes do the heavy lifting without needing a broad non-compete.
It’s also helpful to be clear internally about what counts as “confidential,” especially if you’ve had issues with Confidentiality Breaches before.
When Are Restrictive Covenants In Employment Contracts Enforceable?
This is the make-or-break question for any restrictive covenant in an employment contract: if you needed to enforce it, would it stand up?
While enforceability depends on the facts, courts generally look at a few key themes.
1. Are You Protecting A Legitimate Business Interest?
A restrictive covenant can’t exist just because competition is inconvenient. You need to show the restriction protects a legitimate business interest, such as:
- customer connections (relationships the employee built or maintained on your behalf);
- trade secrets and confidential information (pricing, pipelines, strategy, processes);
- workforce stability (preventing a departing employee from raiding your team).
If the covenant is trying to protect something vague like “we don’t want them working elsewhere,” that’s where enforceability usually falls down.
2. Is The Restriction Reasonable In Scope?
The restriction needs to be no wider than reasonably necessary. “Scope” usually includes:
- Duration (e.g. 3 months, 6 months, 12 months);
- Geographic area (e.g. a specific region, not “anywhere in the world”);
- Activity restrained (e.g. only the type of work that creates risk to you);
- Who it applies to (e.g. only clients they worked with, not every client you’ve ever had).
A clause can fail if it’s simply “too much,” even if your intention is understandable.
3. Does The Employee’s Role Justify The Restriction?
Courts will typically consider the employee’s seniority and access. For example:
- A junior employee with no client contact and limited access to sensitive information is less likely to justify strong post-termination restrictions.
- A senior salesperson, account manager, or director-level hire who controls key relationships may justify stronger restrictions (because the business risk is genuinely higher).
This is why copying and pasting the same restrictive covenant across every role is risky. What’s reasonable for your head of sales might be unreasonable (and unenforceable) for a junior admin role.
4. Was The Covenant Properly Incorporated Into The Contract?
Even well-drafted restrictions can be undermined if they weren’t properly agreed.
Common pitfalls include:
- issuing a new contract with fresh restrictions but not giving the employee proper notice or agreement;
- trying to introduce new covenants mid-employment without offering something in return (there are legal issues around “consideration”);
- having unclear or inconsistent clauses across offer letters, contracts, and policies.
This is one reason it’s worth getting the contract right from day one, especially if you’re hiring for a growth role where relationships and knowledge will build quickly.
5. Are You Acting Consistently At Exit?
How you handle offboarding can affect the practical enforceability of restrictive covenants.
For example, if an employee resigns and you immediately allow them to work out a long notice period with full access to systems and clients, it may increase your risk. On the other hand, using garden leave appropriately, removing access, and clearly confirming post-termination obligations can strengthen your position.
And if the employment ends through a dispute, you’ll want your termination process and paperwork to be consistent and clear, including a well-structured Termination Letter where appropriate.
How Do You Draft Restrictive Covenants That Actually Protect Your Business?
Restrictive covenants can be powerful, but only if they’re drafted with your real-world risks in mind.
Here’s a practical approach we often recommend for small businesses.
1. Start With The Risk (Not The Clause)
Before writing anything, get clear on what you’re actually trying to protect:
- Is it your client list?
- Your pricing model?
- Your pipeline and strategy?
- Your team?
- A particular product or method?
Once you know the risk, you can pick the narrowest covenant that addresses it. For example, if the risk is client poaching, a client non-solicitation clause might be sufficient without adding a broad non-compete.
2. Use A Layered Set Of Protections
Instead of relying on one heavy restriction, it’s usually better to use layered protections such as:
- clear confidentiality and IP clauses;
- non-solicitation / non-dealing clauses for key clients;
- non-poaching clauses for staff;
- reasonable notice periods and (where suitable) garden leave;
- strong internal processes (CRM permissions, access controls, written handover).
Restrictive covenants should support your operations, not replace them.
3. Match The Covenant To The Role
A classic mistake is putting the same restrictive covenant into every contract “just in case.” If it’s too broad for a role, it might be unenforceable for that role, and you lose the protection when you actually need it.
If you’ve got a mix of roles (e.g. junior staff, senior sales, technical specialists), it often makes sense to have different templates or tailored schedules.
4. Be Careful With Timeframes
There’s no universal “correct” timeframe, but in practice, shorter is easier to justify.
A good way to think about duration is: how long would it reasonably take you to protect the relationship or replace the employee’s influence?
For example:
- If your sales cycle is short and customers buy quickly, a shorter restriction may be sufficient.
- If your sales cycle is long and relationship-driven, you may justify a longer restriction (but it still needs to be defensible).
5. Keep Definitions Clear (Clients, Prospects, Competitors)
Many disputes arise because the clause is vague. Helpful definitions can include:
- “Client” = a person or business the employee had dealings with in the last X months.
- “Prospective client” = a lead you actively pitched, quoted, or negotiated with (not anyone who visited your website once).
- “Competing business” = defined by your real services/products, not an overly broad industry label.
6. Don’t Forget Performance And Conduct Risks
Restrictive covenants are only one part of managing employment risk. If your underlying concern is “what if the hire doesn’t work out” or “what if there are conduct issues,” you’ll also want a sensible probation and performance process.
Having a plan for Performance Improvement Plans can help you manage risk early, before a difficult exit becomes a bigger dispute.
7. Avoid DIY Templates For High-Stakes Roles
It’s tempting to download a template and add a tough-sounding non-compete clause. The risk is that you end up with something that looks protective but doesn’t actually hold up.
Restrictive covenants need to be drafted with your:
- industry and competitive landscape;
- sales cycle and client types;
- geographic reach;
- employee seniority and access; and
- business model
in mind. For key hires (sales, management, technical leads), tailored advice is usually worth it.
Key Takeaways
- Restrictive covenants in employment contracts can protect your customers, confidential information and team, but they’re not automatically enforceable in the UK.
- A restrictive covenant is generally only enforceable if it protects a legitimate business interest and is reasonable in duration, geography, scope and role impact.
- Common restrictive covenants in employment contracts include non-compete, non-solicitation, non-dealing, and non-poaching clauses, alongside strong confidentiality obligations.
- Broad, “one size fits all” restrictions are risky - it’s usually better to match the covenant to the employee’s role and the specific risk to your business.
- Restrictive covenants work best as part of a wider approach, including a clear Employment Contract, good offboarding processes, and sensible performance management.
General information only. This article isn’t legal advice and isn’t a substitute for getting advice on your specific situation.
If you’d like help reviewing or drafting restrictive covenants in your employment contracts, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.
