Restrictive Covenants in Employment Contracts: What Employers Need to Know

12th Mar 2026

Author: Asim Din

When a valued employee leaves your business and joins a competitor, or sets up on their own, the consequences can be serious. Client relationships carefully built over years can be put at risk. Confidential information can find its way into the wrong hands. Key colleagues can be approached and poached.

Restrictive covenants in employment contracts exist precisely to protect against these risks. But they are also one of the more complex and frequently misunderstood areas of employment law. The courts scrutinise them carefully, and a poorly drafted clause can prove worthless when you need it most.

Asim Din, Partner and Commercial Dispute Resolution specialist at Butcher & Barlow, sets out what employers need to understand about restrictive covenants and what to do if they are breached.

What are restrictive covenants?

Restrictive covenants are contractual clauses that limit what an employee can do after their employment ends. The most common types are:

Non-Competition clauses prevent a former employee from working for, or setting up, a competing business within a defined geographical area and for a specified period.

Non-Solicitation clauses prevent a former employee from actively approaching clients, customers, or colleagues of their previous employer for a set period after leaving.

Non-Dealing clauses go a step further than non-solicitation — they prevent a former employee from doing business with a previous employer’s clients or customers even if that client makes the initial approach.

Non-Poaching clauses prevent a former employee (or a new employer) from approaching and recruiting the business’s staff.

Non-Disclosure clauses prevent the disclosure of confidential information, trade secrets, or commercially sensitive data obtained during employment.

Garden Leave clauses require an employee to remain away from the workplace — and away from clients and colleagues — during their notice period, while remaining on the payroll.

What makes a restrictive covenant enforceable?

This is where many employers come unstuck. Courts in England and Wales will not automatically enforce a restrictive covenant simply because it has been signed. They will look at whether it is reasonable and genuinely necessary to protect a legitimate business interest.

Key factors include:

Legitimate business interest. You must be able to point to something worth protecting – client relationships, confidential information, trade secrets, or the stability of a specialist workforce. A covenant designed simply to restrict competition, without a genuine interest behind it, will not stand.

Reasonableness of scope. The restriction must go no further than is necessary to protect that interest. Courts examine the geographical area covered, the duration of the restriction, and the range of activities prohibited. A clause that is too wide in any of these respects risks being unenforceable in its entirety.

The employee’s role. A restriction that might be reasonable for a senior director with access to key client relationships may be entirely unreasonable for a junior member of staff with no such access. Applying the same standard clause to everyone in a business, regardless of seniority or role, is a common mistake, and one the courts have shown little sympathy for.

Retrospective restrictive covenants

Ideally, restrictive covenants should be agreed at the point of recruitment and built into the original contract. However, it is sometimes necessary to introduce or amend covenants after employment has begun, for example, following a promotion, a significant change in role, or a business acquisition.

This requires care. An employee’s consent is needed, and ideally that consent should be supported by some form of consideration to make the agreement legally robust. Without fresh consideration, the covenant may later be challenged.

Even where consent is not forthcoming, employers are not entirely without options. It is possible to impose a change unilaterally, though this carries the risk of a constructive dismissal claim if the employee resigns in response. It is also possible to terminate and re-engage on new terms, but this is a higher-risk approach that can give rise to unfair dismissal claims depending on the circumstances.

In either case, you will need to demonstrate a genuine commercial reason for the change and be able to show that the amended restriction is reasonable and proportionate.

What constitutes a breach?

A breach occurs when a former employee acts in a way that violates the terms of a restrictive covenant. Common examples include:

Engaging in Prohibited Activities: An ex-employee starting a competing business or working for a competitor in violation of the non-competition clause.

Soliciting Customers or Employees: Breaching the non-solicitation clause by attempting to poach clients, customers, or fellow colleagues.

Disclosing Confidential Information: Revealing trade secrets or confidential data of the former employer, violating the non-disclosure clause.

Engaging with Customers: Accepting an approach by a customer or client of a previous employer in breach of a non-dealing clause and doing business with that customer or client.

Remedies available to employers

If you discover a breach, or have reason to believe one is imminent, the following remedies may be available:

Injunctive relief is often the most powerful and time-sensitive remedy. An injunction from the court can prevent the former employee from continuing the prohibited activity. Given that the damage from a breach can escalate quickly (particularly where clients or colleagues are being approached) speed is critical. Courts can grant emergency (interim) injunctions where the risk of ongoing harm is immediate.

Damages can be sought to compensate for losses flowing from the breach, including lost business, damage to client relationships, and harm to commercial reputation.

Account of profits may be available where the former employee has made financial gains as a direct result of their breach. In appropriate cases, you may be entitled to recover some or all of those gains.

Delivery up or destruction of confidential information can be ordered by the court where proprietary materials or data have been improperly taken or retained.

When restrictive covenants may not be enforceable

Equally important is understanding when a covenant is unlikely to hold. Courts have declined to enforce covenants where:

• The covenant is too restrictive and wide in their impact
• The covenant is not reasonably necessary to protect the legitimate business interests of the employer
• The covenant is not relevant to an employee’s role (particularly if their role has changed since the covenant was made)
• The covenant was unenforceable when the contract was first entered
• The employee has not signed their employment contract and the employer cannot demonstrate that the employee has accepted the terms
• There is a lack of consistency across multiple employment contracts (eg the employer takes a broad brush approach and imposes the same restrictions on everyone rather than looking at each employee or at least class of employee separately)

A changing landscape: reform on the horizon

Employers should be aware that the law in this area may be subject to reform. In November 2025, the government issued a working paper on non-compete clauses, consulting on options that include a statutory cap on their duration or, at the more radical end, an outright ban in certain circumstances. The consultation closed in February 2026 and, while no firm decisions have been announced, the direction of travel is towards tighter regulation. This makes it all the more important for businesses to ensure that any covenants currently in place are proportionate and well-drafted, both to be enforceable now and to withstand whatever changes may follow.

How Butcher & Barlow can help

Restrictive covenant issues often arise at critical points in the life of a business, whether you are recruiting senior employees, reviewing existing contracts, managing a key departure or responding to a suspected or actual breach.

Our Employment Law and Commercial Dispute Resolution Teams work with employers to ensure restrictive covenants are appropriately drafted, tailored to the employee’s role and capable of protecting the business interests that matter most. We can review existing employment contracts, advise on the enforceability of restrictive covenants and help you update contractual protections as your business grows and evolves.

Where a breach has occurred, or there is a risk that one is imminent, we can advise on the options available to protect your business, including injunctive relief, recovery of losses and alternative forms of dispute resolution where appropriate.

Every business is different. We take the time to understand your commercial objectives, your workforce and the relationships that underpin your success, providing practical and proportionate advice tailored to your circumstances.

If you would like advice on restrictive covenants, employment contracts or a potential breach, please contact Asim Din or a member of our team.

To speak to Asim Din about restrictive covenants, employment contracts or a potential breach, please contact him at adin@butcher-barlow.co.uk