Reasonable Restraint: Making Restrictive Covenants Work When a Key Employee Leaves

When a senior salesperson, consultant or fee-earner resigns, the immediate concern is rarely the empty desk. It is the client list in their pocket. UK employers often assume that a restrictive covenant will do the work of protecting the business. In practice, a poorly drafted clause can be worse than none at all: it may create a false sense of security, invite litigation that cannot be won and damage the employer's position in any later negotiation.

The legal starting point is that restraints on trade are void unless they protect a legitimate business interest and go no further than is reasonable. That principle is not a technicality. It shapes how tribunals and courts read every non-solicitation, non-dealing and non-compete clause. For SMEs, the practical task is to identify the interest worth protecting, choose the narrowest tool that does the job and keep evidence that shows the clause is proportionate.

Three tools, three different jobs

A non-solicitation clause prevents a departing employee from approaching clients to win their business. It does not usually stop the client from approaching the former employee. A non-dealing clause goes further: it prevents the employee from dealing with clients at all, even if the client makes the first move. A non-compete clause is broader still, restricting the employee from working for a competitor or setting up a rival business for a defined period.

Each clause carries a different risk of being found unreasonable. Non-solicitation is often the easiest to justify where the employee had direct client responsibility. Non-dealing is harder to defend because it can catch genuine client choice. Non-compete is the hardest of all: it may be justified for a senior figure with strategic knowledge, but it should not be used as a default add-on for every role.

A common drafting error is to use all three without considering whether each is necessary. A court will not rewrite a clause to make it fair. If the employer has overreached, the usual outcome is that the restraint fails altogether. A severability clause may allow a court to remove an unenforceable part, but it is not a cure for a clause that was never properly thought through.

Reasonableness in practice

Reasonableness depends on the employee's role, seniority, access to confidential information, influence over clients and the length of the restriction. A three-month non-solicitation clause may be defensible for a business development manager. A twelve-month non-compete covering the whole of the UK may not be, particularly if the employee's knowledge becomes stale quickly.

Geography matters, but not in a mechanical way. A clause limited to clients the employee dealt with in the final twelve months is usually more defensible than a clause covering every client of the business. Duration matters too. The period should reflect how long the employer's legitimate interest genuinely lasts, not how long the employer would like to delay competition.

The employee's duties during notice are part of the picture. Garden leave can be useful because it keeps the employee away from clients and current information while the notice period runs. But garden leave is not a substitute for a well-drafted covenant. The employer must usually continue to pay the employee and should ensure the contract expressly permits garden leave. Sending someone home without a contractual right to do so can create its own dispute.

Evidence is where cases are won and lost

Enforcement often turns on documents rather than the wording of the clause. Employers should preserve emails, CRM records, call logs, expense claims and messages showing client contact around the resignation. Timing is important. A flurry of client calls in the final week, followed by those clients moving shortly after the employee joins a competitor, may support an inference that the employee solicited them.

Evidence should be gathered lawfully and proportionately. Reviewing a departing employee's mailbox or devices requires care, particularly where personal data is involved. Employers should follow their own policies, limit the review to material relevant to the investigation and record who accessed what. A heavy-handed approach can undermine the employer's position and create separate data protection or constructive dismissal risks.

It also helps to show that clients were not simply exercising their own choice. If the former employer has evidence that the employee initiated contact, used confidential pricing information or misrepresented the position, the case is stronger. If clients independently decided to follow the employee, a non-dealing clause may be difficult to enforce.

Interim injunctions: speed, cost and realism

Where the employer has a strong clause and clear evidence of breach, it may consider applying to the High Court for an interim injunction. These applications are urgent and expensive. The court will ask whether there is a serious issue to be tried, whether damages would be an adequate remedy and whether the balance of convenience favours granting relief. The employer must usually give a cross-undertaking in damages, meaning it may have to compensate the employee if the injunction later proves to have been wrongly granted.

A springboard injunction may be available where the employee has taken confidential information or gained an unfair head start. But these are specialist remedies, not routine tools. The employer should weigh the cost of litigation against the commercial value of the protection. In many cases, a carefully worded letter before action and a negotiated exit are more effective than a rushed application.

Drafting for SMEs

Before drafting, identify the legitimate interest. Is it client relationships, confidential information, supplier terms or strategic pricing? Then choose the clause that addresses that interest with the least restraint. Define the protected clients by reference to actual dealings, set a realistic duration and avoid blanket geographical bans unless the role truly justifies them.

Review covenants regularly, especially when an employee is promoted. A clause that was reasonable for a junior account manager may be inadequate for a director with board-level knowledge, and a clause that was reasonable for a director may be excessive for someone in a support role. Keep a record of why the restraint was chosen. If the clause is ever challenged, that record will help show that the employer turned its mind to proportionality rather than copying a template.

Finally, remember that a covenant is only one part of the protection. Confidentiality clauses, notice periods, garden leave provisions, return-of-property obligations and a clear exit process all matter. The employer that documents client contact, controls access to information and acts quickly when a resignation lands will usually be in a stronger position than one that relies on a single clause and hopes for the best.

This article is general guidance for UK businesses and is not a substitute for legal advice on a specific set of facts.