Non-compete clause

A restrictive covenant is void at common law as a restraint of trade unless the employer can show it goes no further than is reasonably necessary to protect a legitimate business interest. That is the whole test, and it is applied as at the date the contract was entered into rather than the date the employee leaves. A court will not rewrite a restriction that is too wide. It will refuse to enforce it.

What counts as a legitimate interest

Three things: customer and supplier connections, confidential information and trade secrets, and the stability of the workforce. Preventing competition for its own sake is not one of them, and that decides which restriction to reach for. If the concern is that the person will take clients, a non-solicitation or non-dealing clause protects the interest and is far more likely to be upheld than a ban on working in the sector. A non-compete is the widest restriction available and should be kept for people whose knowledge of the business would do real damage in a competitor's hands.

Duration, area and business, tailored to the individual

The template asks you to complete a Restricted Period, a Restricted Area and a Restricted Business, and the three are judged together. Six months is common. Twelve needs a clear justification tied to that person's role, and rarely survives without one. The area has to bear some relationship to where the business actually competes, so a mileage radius makes sense for a business with a catchment and very little sense for one selling nationally online. Shorter and narrower is more likely to be enforced, which is the opposite of the instinct most employers bring to it.

The commonest failure is the same wording pasted into every contract in the business, because it will be judged against the most junior person it applies to. A twelve month non-compete on a junior hire protects nothing and puts the whole clause at risk.

How this one is put together

It is a clause rather than an agreement, drafted to be inserted into a contract of employment or a consultancy agreement, usually immediately after the confidentiality clause. It carries its own definitions, including Key Employee and the restricted terms, so either insert those with it or align them with the definitions already in the main contract, then check the cross-references. For a consultancy agreement, Employee becomes Consultant and employment becomes engagement.

A restriction introduced part way through employment needs fresh consideration to bind, such as a pay rise or a promotion. Continued employment alone is a weak basis. Where a clause is too wide a court may sever the offending words, following the Supreme Court in Tillman v Egon Zehnder, but that is a rescue rather than a drafting strategy.

The position may change

Statutory reform has been under consideration for some time. The government published a working paper on options for reform in February 2026 canvassing a statutory limit of three months, a salary threshold and an outright ban. Nothing has been enacted and the paper says its results are non-binding, so the common law test above still governs. It is worth knowing the ground may move before relying on a longer period.

For a senior hire, a founder, or anyone leaving with a client list, the restriction is worth drafting to the role. Our employment law and HR solicitors do that, and advise on enforcement where someone has already gone.