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1. Introduction: Why Restrictive Covenants Matter to Employees

Restrictive covenants—such as non-compete, non-solicitation, and non-dealing clauses—are standard in contracts for senior professionals, especially in law firms, investment banks, and technology or consultancy businesses. These clauses are designed to protect the employer’s business interests if a key employee leaves, aiming to prevent unfair competition, client poaching, or misuse of confidential information.

For employees, these clauses can feel intimidating. They may appear to block you from working in your industry, contacting former clients, or even joining a competitor for months or years. The reality is more nuanced: many restrictive covenants are unenforceable, and courts in England and Wales will only uphold them if they are reasonable and necessary to protect genuine business interests.

2. The Basics: What You Need to Know Before You Panic

Not all restrictive covenants are enforceable. The law is clear: any clause that goes further than necessary to protect the employer’s legitimate interests will be struck out. The courts apply the “restraint of trade” doctrine, which means the starting point is that such clauses are void unless justified.

Key points:

• Reasonableness: The restriction must be reasonable in scope (what you’re prevented from doing), duration (how long it lasts), and geography (where it applies).

• Legitimate Interest: The employer must show the clause protects something real—like client relationships, confidential information, or the stability of the workforce.

• All or Nothing: If a clause is too wide, the court will usually strike it out entirely rather than rewrite it to make it fair (the “blue pencil” rule).

Example:
A 12-month worldwide non-compete for a mid-level investment banker was struck out in 2024 because the employer couldn’t show why such a broad restriction was necessary for that role.

3. Common Ways Employees Win (or Defend) These Cases

a) Too Wide or Vague

Courts look at whether the restriction is no wider than necessary. If it covers too much time, too broad a role, or too large a geography, it’s likely to be unenforceable.

• Time: Six months is often seen as reasonable for senior roles; 12 months is harder to justify unless there’s a strong business case.

• Geography: A UK-wide restriction may be justified for a national sales director, but a global ban for a regional manager is unlikely to survive.

• Activities: Clauses that prevent you from working in any capacity for a competitor (rather than just in your specialist area) are often struck out.

Example:
In Brake Brothers Ltd v Ungless [2004] EWHC 2799 (QB), the court found that a clause preventing a senior manager from working for any competitor, in any role, for 12 months was too wide and unenforceable.

b) Delay by Employer

If your former employer waits weeks or months after learning you’ve joined a competitor before seeking an injunction, the court may refuse their application. This is because delay suggests the harm isn’t urgent or serious.

Example:
In Planon Ltd v Gilligan, the employer’s delay of several weeks in seeking an injunction was fatal to their case.

c) No Benefit for Signing (“Consideration”)

If you were asked to sign new or tougher restrictions without any real benefit—such as a pay rise, bonus, or promotion—you can argue the clause is unenforceable for lack of consideration.

Example:
A solicitor promoted to “senior associate” but given no pay rise or new benefits, yet required to sign stricter covenants, successfully challenged the enforceability of those clauses.

d) Public Domain and Know-How

You are entitled to use your general skills, experience, and knowledge—even if you gained them with your former employer. Only genuine trade secrets or confidential information (like a client database or pricing model) are protected.

Example:
A departing analyst who used their memory of industry contacts (all available on LinkedIn) was found not to have breached any enforceable restriction.

e) Unclear or Poorly Drafted Clauses

If a clause is ambiguous or covers “all business activities,” courts will not rewrite it to make it fair. The “blue pencil” rule means the court can only remove offending words if the remainder makes sense.

Example:
A non-compete clause that prevented a compliance officer from working “in any capacity” for any financial services firm was struck out as too vague and wide.

4. Evidence That Helps Employees

Winning or defending a restrictive covenant claim often comes down to evidence. Here’s what you should gather:

• Your Contract: The full employment contract, including all schedules and any later amendments.

• Emails and Correspondence: Any emails about the negotiation or signing of the covenant, especially if you raised concerns or were promised something in return.

• Job Descriptions: Both your old and new roles—showing differences can help defeat a non-compete.

• Client Lists and Public Sources: Evidence that client details are in the public domain (e.g., LinkedIn, Companies House).

• Mitigation Evidence: If accused of poaching, keep records of how you approached new clients (e.g., only using public information, not confidential lists).

• Timeline of Events: When you left, when you joined the new employer, and when your old employer took action.

Tip:
If you’re accused of breaching a non-solicitation clause, evidence that the client approached you (not the other way round) is powerful.

5. What to Do If You’re Threatened With Legal Action

If you receive a solicitor’s letter or are threatened with an injunction:

• Don’t Panic: Most cases settle before court. Many covenants are unenforceable.

• Preserve Evidence: Save all relevant emails, contracts, and communications.

• Respond Promptly: Acknowledge receipt, but don’t admit liability or agree to anything immediately.

• Seek Advice: If you’re in a regulated sector (like banking or law), check if your new employer offers legal support.

• Consider Negotiation: Sometimes, offering a limited undertaking (e.g., not contacting certain clients for a short period) can resolve matters quickly.

• Challenge Delay: If your old employer waited weeks to act, highlight this in your response.

Example:
A departing investment manager received a “cease and desist” letter but responded with evidence that the restriction was too wide and that the employer had delayed. The employer withdrew the threat after a short negotiation.

6. Typical Outcomes and What to Expect

Many employees worry that a restrictive covenant means the end of their career in their sector. In reality, most cases do not reach a full trial. Here’s what typically happens:

• High Settlement Rates:
  Over 80% of restrictive covenant disputes settle before trial, often after an initial exchange of letters or at the interim injunction stage. Settlement might involve agreeing not to contact certain clients for a short period, or a limited non-compete in a specific region.

  
  

• Court’s Approach:
  The High Court will only enforce a covenant if it is satisfied the restriction is reasonable and necessary to protect the employer’s legitimate interests. The court will not enforce a clause simply because it was agreed in a contract—reasonableness is always tested.

  
  

• Costs and Risks:
  Legal costs for a single injunction hearing can range from £30,000 to £50,000 per side. If the employer loses, they may be ordered to pay your costs. If you lose, you may have to pay theirs, but this is rare if the clause is genuinely too wide or the employer delayed.

  
  

• Realistic Outcomes:

  • A junior analyst’s 12-month non-compete was struck out as excessive.

  • A sales director settled for a three-month non-solicitation of named clients, rather than the 12 months originally demanded.

  • An investment banker’s case was dropped after the employer failed to act quickly.

7. Real-World Examples

Example 1: Junior Manager’s Non-Compete Struck Out
A junior manager in a tech firm was subject to a 12-month non-compete covering all of Europe. The court found this far too wide for the role and struck it out, allowing the employee to join a competitor within weeks.

Example 2: Sales Director Settles for Shorter Restriction
A sales director in a financial services firm faced a 12-month non-solicitation clause. After evidence showed most clients were long-standing and had approached him, not the other way round, the case settled with a three-month restriction on only two clients.

Example 3: Employer’s Delay Fatal to Case
A solicitor moved to a rival law firm. The former employer waited two months before taking action. The court refused the injunction, citing the delay as evidence the risk was not urgent.

8. Frequently Asked Questions

Can I work for a competitor?
Often yes, especially if the non-compete is too wide or not justified by your role. The court will look at what is reasonable for your position.

What if I contact old clients?
If you use only public information and do not misuse confidential data, you may be able to defend a claim. If clients approach you, keep evidence of this.

Will I have to pay my old employer’s costs?
Only if you lose and the court finds the covenant was reasonable and you breached it. If you win, your employer may have to pay your costs.

What if I signed under pressure?
If you were forced to sign without negotiation or benefit, this can be a strong defence.

9. Checklist: Preparing Your Defence

• Gather your employment contract and any amendments.

• Collect all correspondence about the covenant or your departure.

• List your old and new job duties—highlight differences.

• Save evidence of how you found your new role (headhunter, public advert, etc.).

• Keep records of client approaches and communications.

• Note any delay by your former employer in taking action.

• Prepare a timeline of events from resignation to present.

10. Final Thoughts

Most restrictive covenant disputes are resolved without a trial. The law is on your side if the restriction is too wide, you received no benefit for signing, or your employer delayed. Being proactive, gathering evidence, and understanding your rights can make all the difference. In most cases, a pragmatic settlement is possible, and your career need not be derailed by an overreaching clause.

Disclaimer: This content is for general information only and does not constitute legal, financial, or tax advice. Outcomes may vary depending on your individual circumstances.