Post-termination restrictive covenants enforceability

This is a common concern for employers, and the answer depends heavily on the specific steps you have taken before the employee leaves.

The general position:

There is no automatic right to prevent a former employee from working for a competitor. Once the employment relationship ends, the employee is generally free to work wherever they choose. The law in England and Wales favours freedom of trade and treats restrictions on a person's ability to earn a living with real scepticism.

However, there are several ways you can protect your business, and the strength of your position depends on what is already in place.

1. Restrictive covenants in the employment contract

The most common and important route is through post-termination restrictive covenants, typically included in the contract of employment. These might include a non-compete clause (preventing work for a competitor for a period), a non-solicitation clause (preventing them from approaching your clients), a non-dealing clause (preventing them from doing business with your clients even if the client approaches them), and a non-poaching clause (preventing them from recruiting your other staff).

These clauses are only enforceable if they go no further than is reasonably necessary to protect a legitimate business interest. The courts will look at the duration, the geographical scope, the seniority of the employee, and the nature of the restriction. A six-month non-compete for a senior employee with access to highly confidential information and key client relationships may well be upheld. A twelve-month blanket ban on a junior employee working anywhere in the same industry almost certainly will not.

If the restriction is too wide, a court will not rewrite it to make it reasonable. It simply falls away entirely.

2. Confidential information and trade secrets

Even without a restrictive covenant, every employee owes a duty not to misuse trade secrets and genuinely confidential information after they leave. This comes from the common law, supplemented by implied contractual terms. The difficulty is that the threshold for what counts as protectable after the employment ends is quite high. General skill, knowledge, and experience belong to the employee and cannot be restricted.

If you can show that a former employee has taken specific confidential information, such as client lists, pricing data, or proprietary processes, you may have a claim even without express post-termination restrictions.

3. Garden leave

If the contract includes a garden leave clause, you can require the employee to stay at home during their notice period while still being employed by you. During this time, their contractual duties to you still apply, including any duty of fidelity. This can be a useful way of keeping them away from competitors and clients while the market moves on slightly before any post-termination restriction kicks in.

Without a garden leave clause, you may still be able to place someone on garden leave, but enforcing it can be more difficult.

4. Injunctive relief

If you have enforceable restrictive covenants and the former employee breaches them, the usual remedy is to seek an interim injunction in the High Court to restrain the breach. The court applies the American Cyanamid principles, considering whether there is a serious question to be tried, whether damages would be an adequate remedy, and where the balance of convenience lies. You will need to move quickly because delay undermines urgency, and the court may take the view that if you waited weeks or months you are not truly suffering irreparable harm.

You should also be aware that if the injunction is granted and later turns out to have been wrongly obtained, you will be liable on the cross-undertaking in damages, which can be substantial.

5. Practical considerations

If there is no restrictive covenant in the contract, you are in a much weaker position. You would need to rely on the narrower protection for trade secrets and confidential information, or potentially bring a claim in relation to any specific wrongful acts such as data theft.

If you are at the stage of the employee handing in their notice, it is too late to introduce new restrictions. Any new covenant would require fresh consideration, meaning a new benefit for the employee, and even then might be challenged.

If you are planning ahead, the most effective approach is to ensure that all employment contracts, particularly for senior or commercially sensitive roles, contain carefully drafted and proportionate restrictive covenants, confidentiality provisions, and garden leave clauses.

Key factors that affect enforceability:

The seniority and role of the employee. The specific legitimate business interest you are protecting, such as client relationships, trade secrets, or workforce stability. The duration and scope of the restriction. Whether the restriction is proportionate. Whether you have acted consistently in enforcing such covenants with other leavers. Whether you have yourself breached the contract, for example by wrongfully dismissing the employee, which may release them from their post-termination obligations.

What you should do now depends on where you are in the process:

1. If you are drafting contracts, ensure the restrictive covenants are tailored and proportionate to each role.
2. If an employee has resigned and you are concerned, review their contract immediately and take advice on whether the restrictions are likely to be enforceable.
3. If a former employee is already working for a competitor in apparent breach, gather evidence promptly and consider whether an application for injunctive relief is warranted.
4. If there are no restrictive covenants in place, focus on what confidential information the employee may have taken and whether there is evidence of specific misuse.

If you can share more about the specific circumstances, such as whether there is a written contract, what restrictions it contains, the employee's role, and what they are doing or planning to do, I can give you a much more targeted answer.