Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Employment lawRestrictive covenants

Time to update restrictive covenants

by Personnel Today 8 Oct 2007
by Personnel Today 8 Oct 2007

A recent survey of City solicitors in Legal Week revealed that 46% of the partners surveyed said that post-termination covenants “are no longer relevant in today’s business environment”, while just 14% thought that “restrictive covenants are still legitimate”.

The results are surprising, because such provisions are routinely included in the employment contracts of key and senior staff. Those who work in this area know how effectively restrictive covenants and confidential information provisions can protect legitimate business interests (such as confidential information, clients, and staff). But the view that they are more trouble to enforce than they are worth is not uncommon.

Bad rap

Why do restrictive covenants get such a bad press? Perhaps it is because English law determines that restrictive covenants are unenforceable unless they are drafted no more widely than necessary to protect a legitimate business interest. If the covenant is too wide, the court will not rewrite it to make it reasonable – it will simply be unenforceable in its entirety.

Clearly, this can be very harsh where an employer has legitimate business interests that deserve protection, but the drafting of a covenant is defective. The law seems outdated in the context of sophisticated senior and key staff, who are often relatively wealthy and legally represented. If such an employee takes substantial benefits under a contract of employment in return for agreeing to certain post-termination restrictions, why should these not be enforceable?

Some feel uncomfortable with the idea that employers can restrict the activities of employees without compensation, having already taken the benefit of the employee’s performance under the employment contract.

As a potential solution, in France, Germany and Italy, employers must pay staff to enforce non-competition and non-solicitation restrictive covenants (no payment is required for covenants prohibiting the poaching of staff).

Others are concerned about restricting ‘ordinary’ employees. In fact, basic categorisation of employees to exclude those who cannot be restricted should be possible. For example, in Italy the law applies different maximum periods of restriction depending on the seniority of employees (five years for senior managers, three years for others).

More trouble?

Finally, some people believe that more easily enforceable covenants will mean wide and unreasonable restrictions. But this needn’t be the case. When the courts consider garden leave provisions, the starting point is that they are enforceable as a matter of public policy, unless they are longer than necessary for the protection of an employer’s legitimate business interests. This may seem like the same test as that for restrictive covenants expressed the other way around, but the court can substitute an unreasonable period of garden leave with a reasonable one, and the provision will be enforceable.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

Restrictive covenants are an important protection for businesses. Clearly, the time has come to overhaul the difficult and outmoded public policy approach to restrictive covenants.



Restrictive covenants: an alternative approach



  • Restrict the application of restrictive covenants to certain categories of employees (for example, managers, staff with technical information amounting to trade secrets).
  • In the case of these protected categories, the employer should be required to show that it requires legitimate business interests to be protected.
  • Staff should be paid for the period during which non-competition and non-solicitation restrictions are enforced.
  • Non-poaching of employees’ restrictive covenants should be more easily and widely enforceable, and no payment should be required in return for enforcement (on the basis that such activity should not be an unavoidable consequence of an employee changing employers).
  • The current ‘all or nothing’ approach should be replaced – the court should substitute a reasonable restriction if the clause is drafted more widely than is necessary to protect a legitimate business interest.

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Off Message: Survival of the loudest
next post
Race equality legal Q&A

You may also like

Fire and rehire: the relocation question

22 May 2025

Minister defends Employment Rights Bill at Acas conference

16 May 2025

CBI chair Soames accuses ministers of not listening...

16 May 2025

EHRC bows to pressure and extends gender consultation

15 May 2025

Contract cleaner loses EAT race discrimination appeal

14 May 2025

Construction workers win compensation claim against defunct employer

9 May 2025

Zero-hours workers’ rights to be extended from beyond...

8 May 2025

Employment tribunal backlog up 23% in a year

7 May 2025

Ministers urged to outlaw misuse of NDAs

7 May 2025

Employment Rights Bill must be tightened to protect...

1 May 2025

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+