Checklist of information needed to draft restrictive covenants

This checklist covers matters to be considered when drafting restrictive covenants. 

When is it useful to have restraints in place?

You may wish to restrict an employee's activities (particularly in the case of a senior employee), both before and/or for a period after they leave, by way of restrictive covenants. Restrictive covenants must be agreed with the employee and this is usually done by including them in the contract of employment. They may also form part of a negotiated termination settlement. For an example, see our Restrictive Covenant Clauses.

As an alternative or supplement to restrictive covenants, you may wish to put an employee on so-called “garden leave” during their notice period, which means they do not attend work and must not take up other employment during this period. Again, an express contractual term is required to enable this option. For an example, see our Garden Leave Clause.

Guidance on drafting restrictive covenants

Restrictive covenants will be only enforceable if you have legitimate business interests to protect and the restraint is no wider than necessary to protect those interests.  Restrictive covenants must therefore be carefully drafted. They should correspond with the circumstances of the individual employer and employee (for example, terms such as “customers”, “clients” and “key employees” should not be generalised but instead be defined and tailored to the business), and should be reviewed on a regular basis. 

It’s always best to get legal advice with regard to restraints to make sure that you stay on the right side of the law.