When are restrictive covenants enforceable?
Restrictive covenants protect an employer’s business by restricting the activities of an employee, generally after the employment has ended.
However, an individual should be free to follow their trade and use their skills without undue interference. So when are and aren’t restrictive covenants enforceable?
What is a restrictive covenant in employment?
A restrictive covenant is a post-termination clause in an employment contract or agreement that limits what an ex-employee can do to protect the employer’s legitimate business interests.
Common types of restrictive covenants
There are various types of restrictive covenants:
- Non-competition (non-compete): this prevents an employee from working with a direct competitor or starting a similar competing business within a specific region and time frame
- Non-solicitation: this clause stops you from approaching or soliciting your employer’s current or prospective clients/customers
- Non-dealing: this prohibits you from doing business with former clients or customers, even if they contact you first
- Non-poaching: this prevents a departing employee (or business party) from actively recruiting, soliciting, or hiring their former colleagues for a set period
- Confidentiality or non-disclosure agreements (NDAs): these restrict you from sharing trade secrets or sensitive company data
How long can a restrictive covenant last?
There is no current legal limit. What is reasonable depends on the role and the business interest that is being protected but the average length of a restrictive period is three to 12 months.
When are restrictive covenants enforceable?
Currently, such clauses are only enforceable if it genuinely looks to protect the business’s legitimate interests.
What may be enforceable depends on whether the clause is clear and well drafted, and is reasonable in terms of:
- The length of the restricted period;
- The scope of appropriate geographical area;
- The scope of applicable activities; and
- When the restrictive covenant was put upon the employee.
What is reasonable is likely to depend on the former employee’s role within the organisation too, e.g. are they a senior or more junior member of staff?
Put simply, your employer cannot enforce this post-termination clause to stop fair competition for longer than is reasonably necessary and worldwide (unless the business is genuinely global).
Case study: Freshasia Foods Ltd v Jing Lu
The case of Freshasia Foods Ltd v Jing Lu [2018] EWHC 3644 (Ch) shows how these tests work in practice.
Mr Lu, who was employed by Freshasia Foods Ltd (a supplier of specialist food products to Chinese retail shops and restaurants), left to work for its competitor, Kung Fu.
He had worked as Freshasia Foods’ Marketing Advertising Manager. He had signed a non-solicitation clause in his employment contract, which prohibited him from soliciting, or attempting to solicit, any business from Freshasia Foods’ current or potential customers for a 12-month period after the termination of his employment. A non-competition clause also prohibited him from directly or indirectly competing with the business during his employment and for 12 months post-termination.
Mr Lu left Freshasia Foods to work for Kung Fu to do virtually the same job. As a result, Freshasia Foods issued proceedings against Mr Lu, seeking to enforce the post-termination restrictions in his contract and seeking an interim injunction pending trial.
High Court involvement
The High Court refused an interim injunction. It decided that the inclusion of potential customers in the scope of prohibited activities was greater than is reasonably necessary to protect Freshasia Foods’ interests. It said that protection should be granted only to the extent that goodwill was built up with actual customers.
Freshasia Foods would likely suffer uncompensatable loss if no injunction was granted. As the non-competition provision was wider than necessary to protect Freshasia Foods’ trade connections, their case on that clause would likely fail. Therefore, they would be unlikely to be entitled to an injunction enforcing it at trial. The Court therefore declined to grant an interim injunction.
Non-solicitation clauses are likely to be enforceable more routinely than non-compete clauses. However, this case is an indication that a prohibition on potential customers, as opposed to actual customers, is unlikely to be held as enforceable.
What happens if I break a restrictive covenant?
Your employer can ask the court for an injunction to stop the activity, e.g. soliciting their client base, and deliver up information used in respect of that breach, i.e. the confidential information held for the client.
Your employer can also claim damages if they can show the breach caused a financial loss, e.g. loss of profit.
Are restrictive covenants about to change?
Yes, but full details are not yet known. On 9th October 2026, legislation to restrict the use of non-compete clauses was announced. The legislation includes a cap on how long they can last, a ban for lower earners or a combination of the two.
These reforms may also extend to other types of restrictive covenants, such as non-solicitation and non-dealing.
Actions for employers
Whether reform happens soon or not, it is a good idea to:
- Review the restrictive covenants in your employment contracts and check that they are appropriate and consistent for each role
- Ensure you can explain what business interest each clause protects
- Keep an eye out for changes in the law
Whilst it is far better to include restrictive covenants in an employee’s contract from the outset, if you need to introduce a new restrictive covenant or amend an existing one after the employment has started, you are free to do so, provided the employee gives their consent to the change or addition. In the absence of the employee’s consent, it is not an easy situation, and we would recommend you seek legal advice.
What employees need to know
If you are about to sign or re-sign an employment contract, read it carefully so you know which restrictions apply. Just because a clause seems over-the-top to you doesn’t mean it’s unenforceable.
Equally, signing a contract doesn’t necessarily mean a restrictive covenant is enforceable; a court may take the view that the clause goes further than is reasonable.
Need advice about restrictive covenants? Contact our employment lawyers
Our employment solicitors advise employers and employees across the UK from our offices across Bristol and the surrounding area.
For advice on restrictive covenants, call 0117 905 9763 or complete our online enquiry form.
