Restrictive covenants

Restrictive covenants are included in an employment contract to prevent competition following the expiry of the employment relationship. A "garden leave" clause, setting out the terms on which an employee continues to be paid, but may not work, on termination of the employment relationship, is a specific type of restrictive covenant. However, not all restrictive covenants included in a contract are in fact automatically enforceable against an employee.

Restrictive covenants are widely used in senior executive contracts, since issues of potential competition increase in sensitivity at more senior levels of employment. Consequently, in claims relating to restrictive covenants, courts may agree to impose injunctions rather than simply award damages.

Senior executives often come to us for advice on the enforceability of their contracts. Our legal experts will analyse the clauses carefully, considering whether there is a legitimate business interest to protect, and whether the extent of the restraint is reasonable according to parameters established by case law. We have wide-ranging experience of advising top executives across a number of different industries.

We will advise on the tactical considerations of re-negotiating the contract, or retaining clauses which might be unreasonable, since this may affect the standing of the rest of the contract.

For further information, view our factsheet: Employment Restrictions