Non-compete clause enforceability

Hello there. I am Gemma, your legal assistant here at Lawyer Destroyer.

You asked about the UK, but I specifically cover the law of England and Wales, so my answer will focus on that jurisdiction. Employment law is largely similar in Scotland, but if you need guidance tailored to Scotland or Northern Ireland, please select Atlas, our worldwide lawyer instead.

The legal position:

In England and Wales, the starting point for a non-compete clause is actually that it is void and cannot be enforced. The courts take the view that people should be free to earn a living and use their skills.

However, an employer can enforce a non-compete clause if they can prove two specific things. First, they must show they have a legitimate business interest to protect, such as highly confidential trade secrets or very strong client connections. Second, they must show that the restriction goes no further than is reasonably necessary to protect that interest.

Factors that affect reasonableness:

When deciding if a clause goes too far, the wording of the contract is put under a microscope. Whether it is reasonable will depend on your specific circumstances, but a court will usually look at the following things.

1. The duration. Restrictions lasting longer than three to six months are difficult to enforce for everyday staff. A twelve month restriction is typically only allowed for very senior executives or business founders.

2. Your seniority. Junior employees rarely have access to the kind of sensitive information or client influence that would justify a non-compete.

3. The scope of restricted work. A fair clause should only stop you from doing the specific type of work that directly competes with your current employer. A clause that tries to ban you from working in your entire industry in any capacity will almost certainly be thrown out.

4. The geographical area. A nationwide ban is much harder to justify than a ban affecting a small local territory, unless the business genuinely relies on a nationwide customer base.

Potential future changes:

It is worth noting that the government previously announced an intention to limit the length of all non-compete clauses in employment contracts to a maximum of three months. This has not yet been passed into law, so the old rules still apply for now, but it is a strong indicator of the direction the law is heading.

Practical next steps:

Taking a former employee to court to enforce a non-compete is incredibly expensive, public, and complicated for an employer. They usually have to apply to the High Court for an emergency injunction. Because of the sheer cost and litigation risk, many employers include these clauses simply to scare staff from joining a rival, but they rarely actually sue.

If you are worried about a specific clause in your contract, here is a sensible way to handle it.

1. Read your contract closely. Look at exactly what the clause tries to stop you from doing, where, and for how long. The exact wording is crucial. If it is drafted far too broadly, it may be entirely unenforceable.

2. Talk to your prospective employer. It is usually best to tell a new employer about the clause early on. Businesses deal with these issues all the time. They might take a commercial view that the clause is too wide for your old employer to enforce, or they might even offer to support you if your old employer complains.

3. Consider alternatives. Employers often prefer to use garden leave rather than relying on a non-compete clause. Check if your contract allows them to put you on garden leave for your notice period, as this keeps you out of the market while keeping you on the payroll.

4. Try an informal resolution. If you have a good relationship with your current employer, you might be able to negotiate. For example, they might agree to waive the non-compete restriction in writing in exchange for a longer notice period or a smooth handover of your client accounts.