Understanding restrictive covenants

Employers often include restrictive covenants in employment contracts with the aim of restricting an employee’s freedom to work for a competitor in the future.

Common examples of restrictive covenants are employment contracts including nonsolicitation clauses to limit ex-employees’ ability to approach the employer’s customers.

These clauses usually include customers with whom the ex-employee has had contact during the course of their employment and will usually cover a specific period before the termination of the employee’s contract.

Another common restrictive covenant is a noncompete clause to constrain the ex-employee from working for a competitor. Usually this type of covenant will be limited in geographical scope and apply to competitors operating within a certain radius of the employer.

To be enforceable, a restrictive covenant has to be reasonable. The employer must also have a legitimate business interest that requires protection.

These types of cases are very ‘fact-sensitive’. You must consider the particular circumstances of the case, including the industry in which the employee and employer operate.

If the employee has held a position of responsibility and has had access to important information as part of their role, their employer will also want restrict their future use of that information.

Understandably, employers will want to protect details of their customers, suppliers and business contacts. They will also want to safeguard other confidential information and ‘trade secrets’.

Price lists and client databases are examples of confidential information an employer may want to protect. Trade secrets include confidential processes specific to the employer’s business, such as designs and methodologies.

However, not all information to which an employee has access can be properly described as ‘confidential’, especially if that information can be found in the public domain.

In order to enforce restrictive covenants, proceedings are brought in the civil courts, rather than the employment tribunal. If the employer is seeking an injunction, then proceedings will be commenced in the High Court.

  • To read this feature in full and access further Lancashire business news, advice and analysis subscribe to Lancashire Business View magazine or join the LBV Hub from just £2.50 per month. Click here to subscribe now.

Enjoyed this? Read more from Rachel Harrison, Farleys

Latest news

1

Rospen shares global reach and industry expertise with MP Grant McGeever and Sarah Smith MP

Rospen shares global reach and industry expertise with MP

23 Dec 2024

2

The Flow Group acquires Blackburn based Modern Bookbinders in strategic asset purchase The Flow Group's Richard, Mick and Helen

The Flow Group acquires Blackburn based Modern Bookbinders in strategic asset purchase

23 Dec 2024

3

fulfilmentcrowd reports record-breaking performance LeeThompsonfulfilmentcrowd

fulfilmentcrowd reports record-breaking performance

20 Dec 2024

4

Record year for Grant Thornton Northern deals team The team

Record year for Grant Thornton Northern deals team

20 Dec 2024

5

New partner among family team hires as Brabners strengthens personal offer Cara Nuttall Chris Fairhurst And Hannah Saxe

New partner among family team hires as Brabners strengthens personal offer

20 Dec 2024

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
The Lancashire Festival of Business
FOB 315
Exhibitions
30 Jan 2025

The Lancashire Festival of Business

Impact Conferencing, Burnley, BB12 6QP

09:30 - 16:00

Skills Bootcamp in Procurement - Cohort 3
Blue-Modern-Land-Travel-Youtube-Thumbnail-2-1024x576.png.png
LBV Hub Awards
14 Jan 2025 - 18 Mar 2025

Skills Bootcamp in Procurement - Cohort 3

Community & Business Partners CIC, Blackburn, BB2 3UA

09:30 - 13:00

Preston Tech Connection - January Meet-Up
Nov Preston Tech Connection event banner-4.png.png
LBV Hub Networking
15 Jan 2025 - 15 Jan 2025

Preston Tech Connection - January Meet-Up

Society1 Coworking Space, Preston, PR1 3LT

18:00 - 19:30

R.I.S.E. and Shine
thumbnail_Emma Weston Illustration WENDY BOWERS RISE Illustrstion.jpg.jpg
LBV Hub Seminars
16 Jan 2025 - 16 Jan 2025

R.I.S.E. and Shine

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

08:45 - 11:00

The Business Network Central & East Lancashire
LBV Hub Networking
16 Jan 2025 - 16 Jan 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

LBV120 Magazine Launch Event
DSC9389
Networking
17 Jan 2025

LBV120 Magazine Launch Event

Lancastrian Suite, Town Hall, Chorley, PR7 1DP

08:30 - 10:30

Red Rose Awards 2025
Red Rose Awards 2025
Awards
13 Mar 2025

Red Rose Awards 2025

Winter Gardens Blackpool

18:00 - 11:59

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV118 Online Graphic
Subscribe now

Weekly news bulletin