Restrictive Covenants in Employment: A Complete UK Guide

Written and reviewed by the Hayhills Legal Advisory editorial team · Last reviewed June 2026

A restrictive covenant in an employment contract is a clause that limits what an employee can do after they leave — typically stopping them from competing, poaching clients, soliciting colleagues or misusing confidential information for a defined period. In the UK these clauses are governed by the common-law doctrine of restraint of trade: they are void as contrary to public policy unless the employer can show the covenant protects a legitimate business interest and goes no further than is reasonably necessary to protect it. Get the drafting right and a covenant is a powerful shield; pitch it too wide and the whole clause can be struck down, leaving the business with no protection at all.

This guide explains the main types of restrictive covenant, the reasonableness test the courts apply, the legitimate interests an employer is allowed to protect, how covenants are enforced, and the drafting choices that decide whether a clause survives a challenge. It also covers the current reform debate: despite years of headlines about a possible statutory cap on non-compete clauses, no such limit had become law as of 2026.

What restrictive covenants are

A restrictive covenant (sometimes called a post-termination restraint) is a contractual promise that constrains an ex-employee’s freedom to work or to deal with people connected to their former employer. Because such clauses interfere with a person’s ability to earn a living and with open competition, the law starts from a position of suspicion. Under the restraint of trade doctrine, a post-termination covenant is void and unenforceable unless the employer proves it is reasonable — both in the interests of the parties and in the public interest.

That burden sits squarely on the employer. It is not enough to say a competitor might benefit from hiring a departing employee; the employer must identify a specific protectable interest and show that the covenant is a proportionate way of protecting it. Courts are alert to clauses that are really about suppressing legitimate competition or punishing a departing employee, and they will not enforce them. This is why a carefully scoped clause aimed at a genuine risk is far more valuable than a sweeping prohibition that looks impressive but collapses under scrutiny.

Restrictive covenants are distinct from the implied and express duties that apply during employment, such as the duty of fidelity. Those duties end when employment ends; the whole point of a restrictive covenant is to extend a measure of protection into the period after the relationship is over.

The main types of restrictive covenant

Most contracts use a combination of covenants, each targeting a different risk. Drafting them as separate, clearly worded clauses matters, because a court can strike out one covenant while leaving the others standing.

The non-compete is the most onerous because it stops the person working in their field at all, so it is the hardest to justify and attracts the closest scrutiny. Non-solicitation and non-dealing covenants are usually easier to defend because they are narrower. A non-dealing covenant is wider than a non-solicitation one — it bites even where the client makes the first approach — so it needs stronger justification. Many well-drafted contracts rely primarily on solicitation, dealing and confidentiality covenants, reserving the non-compete for senior staff with access to the most sensitive information.

When a covenant is enforceable: the reasonableness test

To be enforceable, a covenant must protect a legitimate business interest and be no wider than reasonably necessary to protect it. Reasonableness is tested across three dimensions:

• Subject-matter scope. What activities, clients or roles does the clause cover? A non-solicitation covenant limited to clients the employee actually dealt with in, say, the last 12 months is far more defensible than one covering every client of the business.
• Geographic reach. Any area restriction must match where the business and the employee’s connections actually operate. A nationwide or worldwide ban will rarely be justified for someone whose work was regional.
• Duration. The clause must last only as long as needed to neutralise the advantage the employee gained. For most roles a few months is typical; longer periods need clear justification and are more vulnerable.

Crucially, reasonableness is assessed at the date the contract was entered into, on the facts as they then stood (or were in the parties’ reasonable contemplation), not at the moment the employer tries to enforce the clause. That is why covenants should be reviewed and refreshed on promotion: a clause that was reasonable for a junior hire may be too narrow for a director, while a clause drafted for a senior figure may be unreasonably wide if it is rolled out to junior staff.

Legitimate business interests

English law recognises a limited set of interests that a restrictive covenant may legitimately protect. The three established categories are:

• Trade connections — the goodwill and relationships with clients, customers and suppliers that the employee has had dealings with and could exploit.
• Confidential information and trade secrets — genuinely confidential material such as pricing models, client data, methods or strategy, beyond the general skill and knowledge an employee is free to take with them.
• Stability of the workforce — the interest in keeping a trained, cohesive team together, which non-poaching covenants protect.

A covenant that does not map onto one of these interests is unlikely to be enforced. Importantly, an employer cannot use a covenant simply to stop ordinary competition or to retain the general skills and experience the employee has built up — those belong to the employee. The clearer the link between the specific covenant and a recognised interest, the stronger the clause.

Severance and the blue pencil test

What happens if part of a covenant is too wide? The courts apply the “blue pencil” test: they may delete offending words to leave a valid, enforceable clause, but they will not add words or rewrite the clause to make it reasonable. In the leading authority, Tillman v Egon Zehnder Ltd [2019] UKSC 32 (Supreme Court, 3 July 2019), the words “interested in” in a non-compete were unreasonably wide because, read literally, they barred even a minor shareholding in a competitor. The Court held those words could be severed, leaving the rest of the covenant enforceable.

The modern test for severance asks whether the unenforceable wording can be removed without adding to or modifying the remaining text, whether the remaining terms are still supported by adequate consideration, and whether removing the words changes the overall character of the contract. The practical lesson is twofold: draft each restraint as a discrete, severable provision so that one bad clause does not poison the rest, and never rely on a court to rescue a sloppily drafted covenant — severance can save wording, but it cannot supply protection the clause never properly contained.

Consideration and timing

Like any contractual term, a restrictive covenant must be supported by consideration. Where covenants are included in the original contract of employment, the offer of employment itself provides the consideration. The risk arises when an employer tries to introduce or tighten covenants mid-employment — for example by issuing a new contract to existing staff. Continued employment alone may be weak consideration; it is far safer to tie new covenants to something of value, such as a pay rise, promotion, bonus or other benefit, and to have the employee sign up willingly.

Timing also affects reasonableness. Because the clause is judged as at the date it was agreed, covenants imposed on a junior employee who is later promoted may no longer fit the seniority of the role. Best practice is to revisit covenants at key moments — promotion, a significant pay increase, or a change of duties — and to issue fresh, properly scoped covenants supported by fresh consideration at that point.

Garden leave

Garden leave is a related but separate tool. During a notice period the employer can require the employee to stay away from work while remaining employed and paid, keeping them out of the market and away from clients and confidential information. Because the employee is still employed and paid, garden leave is generally easier to enforce than a post-termination covenant, but it is not unlimited — an excessively long garden leave period can itself be challenged.

Garden leave and restrictive covenants often work together. A well-drafted contract will commonly provide that any period spent on garden leave is set off against the duration of a post-termination non-compete, so the total time the employee is kept out of the market is reasonable. Without a set-off, the combined effect of a long notice period on garden leave plus a full non-compete can tip the overall restraint into being unreasonable.

How restrictive covenants are enforced

If a former employee breaches a covenant, the usual remedy an employer seeks is an injunction — a court order stopping the breach — often sought urgently as an interim injunction while the dispute is resolved. Where confidential information or clients have already been taken, an employer may seek a “springboard” injunction to remove the unfair head-start the wrongdoer has gained. Damages may also be claimed for losses caused by the breach. Speed matters: courts expect an employer to act promptly, and delay can undermine an application for urgent relief.

Litigation of this kind is reserved legal activity. Hayhills does not conduct litigation; where an injunction or court enforcement is needed we introduce a trusted regulated solicitor and work alongside them. Our role is on the advisory side — assessing the strength and scope of covenants, advising on risk and strategy before matters escalate, and helping employers and employees understand their position so that, in many cases, a dispute can be resolved without court proceedings at all.

Drafting covenants that survive a challenge

Good covenant drafting is about precision, not breadth. The most defensible clauses share several features:

• Tailored to the role. Covenants are matched to the individual’s seniority, access to information and client relationships — not copied uniformly across the whole workforce.
• Defined client lists. Non-solicitation and non-dealing clauses are limited to clients the employee actually dealt with in a defined recent period, not the entire customer base.
• Proportionate duration and area. The shortest period and smallest area that genuinely protects the interest — with longer restraints reserved for the most senior staff.
• Separate, severable clauses. Each restraint stands alone so the blue pencil can remove one without affecting the others.
• Set-off against garden leave and clear, defined terms (what counts as a “competitor”, a “client”, “confidential information”).

The 2026 reform debate

Restrictive covenants have been the subject of a long-running reform discussion. In May 2023 the then Government announced an intention to limit post-termination non-compete clauses to a maximum of three months. That proposal was never enacted. The debate was reopened when the Department for Business and Trade published a working paper on 26 November 2025, with the consultation closing on 18 February 2026. It set out options including a statutory duration cap (a three-month limit for employers with 250+ staff, six months for smaller employers), a salary threshold below which non-competes would not bind (floated around the £125,140 additional-rate threshold), an outright ban, or a hybrid. The paper noted that around five million employees in Great Britain work under a non-compete clause, typically lasting about six months.

The key point for businesses and employees in 2026 is that, despite the headlines, no statutory limit on non-compete clauses had become law. The common-law reasonableness test continues to govern enforceability, and existing covenants remain valid where they meet that test. Employers should keep their covenants under review and watch for legislation, but should not assume any cap is already in force. As always, check the current position at GOV.UK, because this is an area the Government has signalled it may change.

Common mistakes to avoid

• One-size-fits-all covenants. Applying the same restraint to junior and senior staff makes senior clauses too weak and junior clauses unenforceable.
• Drafting too wide “to be safe”. Overbroad clauses are more likely to be struck down entirely — breadth is a weakness, not a strength.
• Ignoring consideration. Adding covenants mid-employment without fresh consideration leaves them unenforceable.
• No garden-leave set-off. Long notice plus a full non-compete, with no set-off, can render the overall restraint unreasonable.
• Delay in enforcing. Courts expect prompt action; sitting on a breach undermines an urgent injunction.
• Assuming a statutory cap exists. As of 2026 no non-compete time limit is in force — the common-law test still applies.

What we see in practice

In our advisory work the covenant that most often fails is not the aggressive non-compete everyone worries about — it is the boilerplate non-solicitation clause copied unchanged across every contract, covering “any client of the company” including clients the employee never met. It looks protective and is the easiest clause to lose, because its breadth is exactly what a court refuses to enforce. The employers who hold up best in a dispute are rarely those with the widest covenants; they are the ones who reissued tailored, narrower covenants at the employee’s last promotion, with a pay rise as fresh consideration — turning a vulnerable clause into an enforceable one at the very moment the law lets them. Breadth feels like safety; in covenants, precision is safety.

Covenants in business sales and shareholder agreements

Restrictive covenants are not confined to employment contracts. They also appear in the sale of a business and in shareholder and partnership agreements — and the courts treat these differently. Where a covenant is given by the seller of a business, protecting the goodwill the buyer has paid for, it is judged far more leniently than an employment covenant. The parties are assumed to be bargaining at arm’s length and on more equal terms, so longer durations and wider geographic restrictions are routinely upheld. A two or three year non-compete that would be struck down in an employment contract may be entirely reasonable as part of a share sale.

This distinction matters when an individual is both an employee and a shareholder, for example a founder who sells their company but stays on to work in it. Covenants in the share purchase agreement and covenants in the employment contract may be scrutinised under different standards, and well-advised parties keep the two sets of restraints clearly separate so that the more robust commercial covenants are not dragged down to the employment standard. Getting this structure right at the point of sale protects the buyer’s investment and avoids argument later.

If you are asked to sign restrictive covenants

For employees, covenants are easy to sign and hard to escape, so it pays to understand them before agreeing. Read each covenant carefully: how long does it last, what exactly does it stop you doing, and which clients or competitors does it actually cover? A clause that looks intimidating may in fact be too wide to be enforceable — but you should never simply assume that, because enforceability turns on the precise facts and wording.

If covenants are being introduced after you started — for instance in a new contract circulated to existing staff — ask what you are receiving in return, because covenants need consideration to bind you. Before moving to a competitor or starting your own venture, it is worth taking advice on what your covenants realistically prevent and what risk you would be running. In many cases the practical position can be clarified, and sometimes negotiated, without anyone going near a courtroom. Understanding the clause is the difference between a confident, low-risk move and an expensive surprise injunction.

Confidentiality covenants and trade secrets

Confidentiality covenants deserve particular attention because they protect an interest — genuinely confidential information — that the law guards closely, and because they can endure longer than other restraints. While a non-compete is measured in months, an obligation not to misuse a true trade secret can continue for as long as the information remains confidential. The challenge lies in definition: a clause that simply forbids disclosing “any information about the business” is too sweeping, because it would catch the general know-how an employee is entitled to take with them. A defensible confidentiality covenant identifies, with reasonable precision, the categories of genuinely sensitive material it protects — pricing structures, client databases, technical methods, strategic plans — rather than everything the employee ever encountered.

Confidentiality clauses also work hand in hand with the other covenants. A departing employee who takes a client list is breaching confidentiality and, if they then approach those clients, breaching non-solicitation too. That overlap can strengthen an employer’s position when seeking urgent relief, because it shows a pattern of conduct rather than an isolated technical breach. For employers, the lesson is to treat confidentiality, solicitation and competition covenants as a coherent package; for employees, it is a reminder that taking data on the way out can expose them on several fronts at once. Our separate guide to trade secrets looks at this protection in more depth.

This article is for general information only and does not constitute legal or accountancy advice. Hayhills Limited, trading as Hayhills Legal Advisory, provides non-reserved legal advisory services. Always check current requirements at GOV.UK.

Frequently asked questions

Are restrictive covenants enforceable in the UK?

Yes, but only if they are reasonable. Under the restraint of trade doctrine a post-termination covenant is void unless the employer proves it protects a legitimate business interest and is no wider than reasonably necessary in scope, geography and duration.

What is the difference between non-solicitation and non-dealing?

A non-solicitation covenant stops a former employee actively approaching clients to win their business. A non-dealing covenant goes further and stops them dealing with those clients at all, even if the client approaches first. Non-dealing is wider and needs stronger justification.

How long can a restrictive covenant last?

There is no fixed statutory limit. The duration must be no longer than reasonably necessary to protect the interest. For many roles a few months is typical; periods of 6 to 12 months are seen for senior staff but need clear justification and are more vulnerable to challenge.

What legitimate interests can a covenant protect?

English law recognises three: trade connections (client, customer and supplier relationships), confidential information and trade secrets, and the stability of a trained workforce. A covenant that does not protect one of these is unlikely to be enforced.

Can a court rewrite an unreasonable covenant?

No. Courts can apply the blue pencil test to delete offending words and leave a valid clause, as in Tillman v Egon Zehnder, but they will not add words or redraft a clause to make it reasonable. Poor drafting cannot be rescued by the court.

Do covenants need consideration?

Yes. Covenants in the original employment contract are supported by the offer of employment. Covenants introduced mid-employment need fresh consideration — such as a pay rise, promotion or bonus — otherwise they may be unenforceable.

What is garden leave and how does it relate to covenants?

Garden leave keeps an employee away from work during their notice period while still employed and paid. It is generally easier to enforce than a post-termination covenant. Well-drafted contracts set off garden leave against any non-compete so the total time out of the market stays reasonable.

How are restrictive covenants enforced?

Usually by seeking an injunction to stop the breach, often urgently, and sometimes a springboard injunction to remove an unfair head-start, plus damages for losses. Speed is important. Litigation is a reserved activity, so Hayhills introduces a regulated solicitor where court enforcement is needed.

Is there a legal limit on non-compete clauses in 2026?

No. A May 2023 proposal to cap non-competes at three months was never enacted, and a further Government consultation ran into early 2026. As of 2026 no statutory limit is in force, and the common-law reasonableness test still governs enforceability. Check GOV.UK for changes.

Can an employer stop me using my general skills and experience?

No. Covenants cannot be used to prevent ordinary competition or to stop you using the general skill, knowledge and experience you have built up — those belong to you. They can only protect specific interests such as client connections, confidential information or workforce stability.