Restrictive Covenants: What Employers Need to Know

In a competitive job market, protecting your business interests is more important than ever. One common tool employers use to safeguard their operations, intellectual property, and client relationships is the use of restrictive covenants in employment contracts.

Restrictive covenants are clauses designed to limit what employees can do after they leave your business. These can include:

• Non-compete clauses: Preventing an employee from working for a competitor for a set period.

• Non-solicitation clauses: Stopping an employee from approaching your clients or customers.

• Non-poaching clauses: Preventing ex-employees from enticing former colleagues to join them.

• Confidentiality clauses: Protecting sensitive business information even after employment ends.

With employees more mobile than ever and remote or hybrid working making access to business-sensitive information easier outside the office, restrictive covenants are becoming a key consideration for employers. Yet, not all covenants are enforceable. Courts will only uphold them if they are reasonable in scope, duration, and geography, and designed to protect a legitimate business interest.

As highlighted by Moorepay, businesses are increasingly reviewing these clauses in light of changing working patterns and a rise in disputes. Poorly drafted or overly broad covenants risk being struck down entirely.

Best practice tips:

✅ Tailor restrictions to the employee’s role and seniority.

✅ Limit the duration - typically 3 to 12 months is considered reasonable.

✅ Clearly define what constitutes a competitor or client.

✅ Review restrictions regularly, especially after promotions or role changes.

Restrictive covenants can be a powerful tool to protect your business, but only if drafted carefully. Regular legal review is essential to ensure your contracts remain enforceable and fit for purpose.

Looking to implement restrictive covenants but unsure as to if your restrictions will hold up in court? We are on hand to support. Dodds Consultancy Group can advise you on what is considered reasonable and assist you in drafting a clause for your contracts. Contact us today for your free 15-minute consultation!