Restrictive covenants in employment contracts

by Practical Law Employment (based on an original by Sean Nesbitt, Taylor Wessing LLP)

A practice note that covers the law relating to restrictive covenants in contracts of employment. This practice note examines the doctrine of restraint of trade, explaining that post-termination restrictions are void unless an employer can prove they are necessary to protect a legitimate business interest and are reasonable in scope and duration. It outlines the various types of covenants, such as non-compete, non-solicitation, non-dealing, and non-poaching clauses, and explores the principles courts apply when assessing their enforceability. Key practical considerations are addressed, including the importance of providing consideration, the effect of promotions on existing covenants, and the rules of construction and severability. It also discusses the implications of a repudiatory breach of contract, the impact of social media on enforcement, and recent government proposals for the reform of non-compete clauses..