Are restrictive covenants in contracts of employment enforceable?
Restrictive covenants which restrict an employee's activities after their employment has ended can in some circumstances by void for being in restraint of trade and contrary to public policy. However, a restrictive covenant in a contract of employment is enforceable if the employer can show that:
- it has a legitimate business interest that it is appropriate to protect
- The protection sought is no more than reasonable, having regard to the interests of both the employer and the employee
Legitimate business interests can include the protection of knowledge of technology, strategic information about the employer's business and customer contact details.
Employers wishing to protect their business interests should consider including appropriately worded restrictive covenants in contracts of employment. Employees who are asked to sign contracts of employment containing restrictive covenants should take legal advice before doing so as they could later find that their job prospects are significantly diminished when they leave their current employment.
For more advice contact David Coward on 01722 410664