UK · EU · US · InternationalRestrictive covenants: what is actually enforceable
Short answer: a restrictive covenant is void as a restraint of trade unless the employer proves it protects a legitimate business interest and goes no further than reasonably necessary. Most are drafted too widely and would not survive a challenge, and neither side usually finds out until it matters.
The three legitimate interests
The courts recognise trade connections with customers and suppliers, confidential information and trade secrets, and stability of the workforce. Preventing ordinary competition is not a legitimate interest. A covenant that simply stops someone earning a living in their field is unenforceable however clearly it is drafted.
The four types, in order of enforceability
Non-solicitation stops the ex employee approaching your customers. The most likely to be upheld, because it is narrow and targeted.
Non-dealing stops them dealing with your customers even where the customer approached them. Harder, because it restricts the customer's choice as well as the employee's.
Non-poaching stops them recruiting your staff. Usually upheld where limited to employees they actually worked with and to senior or skilled roles.
Non-compete stops them working in the sector at all. The hardest to enforce and the most commonly struck down, because it is the widest interference with the right to work.
What decides reasonableness
Duration, geography and scope, judged as at the date the contract was made rather than when it is enforced. Three to six months is commonly upheld for a junior employee, twelve months is arguable for a senior one, and beyond that needs real justification. A geographic radius must reflect where the business actually operates. A covenant imposed on a sales assistant that mirrors one drafted for the managing director will not stand.
Severance can save a clause, but only just
In Tillman v Egon Zehnder the Supreme Court confirmed that offending words can be severed provided they can be removed without adding to or modifying the remaining wording, and provided removal does not change the character of the restraint. The words "or interested in" were struck out and the rest survived. It is a rescue rather than a strategy, and it followed years of litigation.
The point most employers miss
A covenant is judged as at the date it was entered into. Someone promoted from graduate to director over ten years is often still bound by the covenant they signed at the start, drafted for a role they no longer hold and protecting an interest that no longer matches. Covenants should be refreshed at promotion, with fresh consideration, or they protect nothing at the moment they are needed.
Common questions
Are non-compete clauses enforceable in the UK?
Sometimes, but they are the hardest type to enforce. The employer must show a legitimate interest and that the restraint goes no further than reasonably necessary in duration, geography and scope.
How long can a covenant last?
There is no fixed limit. Three to six months is commonly upheld, twelve months is arguable for senior people, and longer needs strong justification tied to the interest protected.
Can part of a covenant be saved if the rest is too wide?
Yes. Following Tillman v Egon Zehnder offending words can be severed if they can be removed without rewriting the clause and without changing the character of the restraint.
Does a covenant signed years ago still bind me?
It is judged as at the date it was made. A covenant drafted for a junior role is often unenforceable against the same person once they are senior, because the restraint no longer matches the interest.
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