It surprises many employers to learn that a non-compete clause in an employment contract starts life as unenforceable. The courts treat any clause that stops someone earning a living after they leave as a "restraint of trade", and restraints of trade are void as contrary to public policy unless the employer can justify them. The good news is that a carefully drafted clause can be justified. This article explains when post-termination non-competes hold up in England and Wales, and how to draft restraints that stand a real chance in court.
The starting point: restraint of trade
A "restrictive covenant" is a promise by an employee not to do certain things after their employment ends, for example, not to work for a competitor, not to poach clients, or not to solicit former colleagues. Because these clauses limit a person's freedom to work and trade, the law presumes they are void.
An employer can rebut that presumption only by showing two things:
- the clause protects a legitimate business interest; and
- it goes no further than is reasonably necessary to protect that interest.
This two-part test traces back to the leading case of Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] and has been applied ever since.
What counts as a "legitimate business interest"?
You cannot use a non-compete simply to stop competition, that is not a protectable interest. What the courts will protect includes:
- Trade connections, relationships with customers, clients and suppliers.
- Confidential information and trade secrets, genuinely confidential know-how, not the general skill and experience the employee has built up.
- Stability of the workforce, protecting the team from being poached.
The classic statement that an employer cannot protect itself against mere competition comes from Herbert Morris Ltd v Saxelby [1916].
The reasonableness test in practice
Even where there is a legitimate interest, the restraint must be no wider than necessary. Courts look closely at:
- Scope, what activities are restricted? A clause covering the whole industry is far harder to justify than one targeting genuine competitors.
- Geography, a nationwide ban is rarely reasonable for a business that operates in one city.
- Duration, how long does it last? For most employees, restraints beyond about 6–12 months are difficult to defend; the more senior the employee, the longer a court may accept.
- The employee's role, a junior employee with no client contact or confidential information will rarely be subject to an enforceable non-compete.
Reasonableness is judged at the date the contract was entered into, so a clause drafted for a senior director should not be applied unchanged to a junior hire.
Draft narrowly, and consider lesser restraints
A full non-compete (banning work for competitors) is the hardest restraint to enforce. Often a narrower clause achieves the same commercial goal and is far more defensible:
- Non-solicitation, not approaching the employer's clients.
- Non-dealing, not doing business with those clients even if they make the first move.
- Non-poaching, not recruiting former colleagues.
Tailor each clause to the individual's role and refresh covenants on promotion.
If part of the clause is too wide
Where a covenant is drafted too broadly, a court may sometimes "sever" (delete) the offending words and enforce the rest, but only within strict limits. The Supreme Court confirmed the modern approach to severance in Tillman v Egon Zehnder Ltd [2019], while making clear that severance is not a substitute for careful drafting.
Garden leave: an alternative tool
Instead of (or alongside) a non-compete, employers often use garden leave, keeping a departing employee on the payroll but away from work and clients during their notice period. Because the employee is still being paid, garden leave can be easier to enforce, though courts will not allow it to be used oppressively.
Reform on the horizon
In 2023 the government announced an intention to cap post-termination non-compete clauses at three months through legislation. At the time of writing this has not yet become law, so the common-law reasonableness test above still governs. It is worth keeping an eye on, as it would significantly limit longer restraints if enacted.
Key takeaways
- Non-compete clauses are presumed void unless the employer justifies them.
- They must protect a legitimate business interest and be no wider than necessary in scope, geography and duration.
- Narrower restraints (non-solicitation, non-dealing, non-poaching) are usually easier to enforce.
- Courts can sometimes sever offending words, but good drafting is the real protection.
- A proposed three-month statutory cap is not yet law.
Sources
- Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535
- Herbert Morris Ltd v Saxelby [1916] 1 AC 688
- Tillman v Egon Zehnder Ltd [2019] UKSC 32
- The common-law doctrine of restraint of trade as applied to contracts of employment
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor.