One of the most common questions we get about employment contracts is about restrictive covenants. You've seen them: clauses that say you can't work for a competitor, can't contact the company's clients, can't do business with suppliers. They're designed to protect the employer, but they can seriously restrict your career options if you're not careful. Here's what you actually need to know about whether yours are enforceable.
What are restrictive covenants?
A restrictive covenant is a clause in an employment contract that restricts what you can do after the employment ends. There are three main types. Non-compete clauses say you can't work for a competitor or start a competing business. Non-solicitation clauses say you can't contact the employer's clients or employees to try to win their business. Non-dealing clauses say you can't do business with the employer's customers or suppliers.
These clauses exist because employment is a relationship of trust. An employer is concerned that if you leave and go to a competitor, you'll use confidential information (client lists, business strategies, trade secrets) to compete with them. Restrictive covenants are a way to protect against that.
When are they enforceable?
Here's the crucial bit: restrictive covenants in employment contracts are only enforceable if they're reasonable. UK employment law has developed a test for reasonableness that's actually well-established. A restrictive covenant is enforceable if it:
Protects a legitimate business interest. This includes trade secrets, confidential information, client relationships, and the stability of the business. The employer needs to prove there's a real business interest at stake.
Goes no further than necessary to protect that interest. This is the key test. Even if there's a legitimate business interest, the restriction has to be proportionate. A worldwide non-compete for five years is likely unreasonable. A regional non-compete for six months is probably fine.
Is reasonable in terms of scope, geography, and duration. A non-compete that covers only your specific sector and geographical area, for a limited time, is much more likely to be enforceable than one that's vague or sweeping.
Is not contrary to public policy. The law doesn't want to prevent people from working. A restriction so onerous that it prevents you from working in your field at all would be against public policy and unenforceable.
Non-compete clauses
Non-compete clauses are the strictest type of restrictive covenant. You're agreeing not to work for a competitor or start a competing business for a set period. The question is always: how long, and what counts as a competitor?
A non-compete for six months is usually enforceable if it's limited to your specific region and market. If you're a financial advisor in the South East and you agree not to work as a financial advisor for another firm in the South East for six months, that's probably reasonable. But if the clause says you can't work for any financial services company anywhere in the world for two years, that's almost certainly unenforceable — it goes way too far.
Duration matters hugely. Six months is a comfortable duration, a year is pushing it, and eighteen months or more is getting risky. Geography matters too. A worldwide restriction is harder to enforce than a regional one. And specificity matters — "can't work in financial services" is broader and riskier than "can't work for FTSE companies in the UK financial sector."
Non-solicitation clauses
Non-solicitation clauses are generally more enforceable than non-competes because they're less restrictive. You're not saying the employee can't work in the sector — you're just saying they can't actively solicit your clients or staff. There's less restraint on the employee's ability to work.
These clauses usually have reasonable durations. Six months to two years is typical. Anything more than three years is rare and would need strong justification. The restriction usually applies to "customers with whom the employee had contact" or "customers the employee worked with," which is narrow and usually enforceable. If it applies to all customers the company has ever had, anywhere in the world, it's too broad.
Non-dealing clauses
Non-dealing clauses say you can't do business with the company's suppliers or customers as part of your new role. These are less common but they can appear in employment contracts. They're usually the narrowest type of restriction because they're limited in scope — you're just agreeing not to trade with specific parties, not agreeing not to work in an industry.
Red flags in restrictive covenants
When you review your employment contract, look for these red flags in restrictive covenants:
Vague definitions. "Can't work for a competitor" is vague. What counts as a competitor? Better language specifies by industry, sector, or lists specific companies. Vague restrictions are less likely to be enforceable, but you don't want to risk a court battle.
Unreasonable duration. Anything over two years is suspicious. Over three years is very hard to enforce. Anything indefinite is almost certainly unenforceable.
Unreasonable geography. Worldwide restrictions are generally unreasonable unless you were a senior executive with global responsibilities. Most restrictive covenants should be limited to your region or country.
Overly broad definitions. "Can't work in financial services" is too broad. "Can't work as a derivatives trader for an investment bank in the UK" is specific and reasonable.
Multiple restrictions stacked together. If you have a non-compete and a non-solicitation and a non-dealing clause, all running for different periods, the contract becomes very restrictive. Push back on having too many restrictions.
What to do if you see problematic covenants
If you're negotiating an employment contract and you see restrictive covenants that seem unreasonable, raise it before you sign. Employers expect to negotiate on restrictive covenants. They're one of the most negotiable parts of an employment contract. Push for shorter duration, narrower scope, and more specific definitions. Don't be afraid to say: "I can accept not competing in my specific area for six months, but I can't agree to a worldwide ban for two years."
If you're already in a job and you're worried about whether your covenant is enforceable, you need legal advice. The question of whether a restrictive covenant is enforceable is fact-specific — it depends on your role, your industry, your market, and what the contract actually says. An unenforceable covenant isn't binding, but you don't know whether it's unenforceable without legal review.
Want to know if your employment contract's restrictive covenants are problematic? Our employment contract review highlights exactly this issue, explains whether your covenants are likely to be enforceable, and tells you what you might be able to negotiate.