Employer restricting work for competitor

Hello there. I am Gemma, a legal assistant here at Lawyer Destroyer. I would be happy to explain how this works.

The short answer is yes, your employer can sometimes stop you from working for a competitor, but they can only do so under quite strict conditions.

The legal position:

In England and Wales, terms in your contract that try to stop you doing things after you leave are called restrictive covenants. A clause specifically stopping you from joining a rival is called a non-compete clause.

The starting point in employment law is that these clauses are actually void because they unfairly restrict your right to earn a living. However, an employer can legally enforce them if they can prove two key things. First, they must have a legitimate business interest to protect, such as highly confidential information, trade secrets, or deep relationships with key clients. Second, the restriction must be reasonable and go no further than is absolutely necessary to protect that interest.

What makes a restriction reasonable:

Whether a non-compete clause is reasonable depends heavily on your specific job and your seniority. What is seen as fair for a chief executive will be very different from what is fair for a junior administrator.

The courts will look closely at how long the restriction lasts. Restrictions of three to six months are commonly upheld if they are carefully drafted. Anything lasting up to twelve months is usually only valid for extremely senior or highly specialised staff. Anything beyond a year is very difficult for an employer to enforce.

They will also look at the geographical area the clause covers. A restriction stopping you from working in the same town might be reasonable for a local sales role, but a nationwide or worldwide ban is rarely acceptable unless the business is genuinely global.

It is worth knowing that the government has recently announced an intention to cap the length of non-compete clauses at three months. However, the necessary legislation has not yet been passed, so the standard rules on reasonableness still apply for now.

Practical next steps:

1. Read your working documents. Check your employment contract carefully to see exactly what you originally agreed to. Look for sections talking about termination, post-termination restrictions, or non-compete clauses. If there is no non-compete clause written securely into your contract, your employer generally cannot stop you from going to a competitor.

2. Consider how your employment is ending. If your employer fundamentally breaches your contract, for example by dismissing you without paying your proper notice pay, these restrictions often become entirely invalid and fall away.

3. Think about garden leave. If your contract has a garden leave clause, your employer might prefer to pay you to stay away from the office during your notice period. This is often used alongside or instead of a non-compete clause to keep you out of the market for a while.

4. Try having an informal chat. If you have a specific new job lined up, you might be able to negotiate a practical agreement. Your current employer might agree to waive the clause entirely if they do not see your new role as a direct commercial threat, or you might agree to steer clear of certain specific clients for a short period to keep the peace.

5. Weigh up the real world risks. Going to court to enforce a non-compete clause by getting an injunction is terribly expensive and difficult for an employer. Unless you are taking prime clients, stealing highly valuable data, or taking a whole team with you, many employers will write a firm warning letter but will rarely spend the tens of thousands of pounds required to actually take you to the High Court.

I hope this helps give you a clearer picture of where you stand. Let me know if you would like to explore any of these points in more detail.