Restrictive covenants 



If an employer wants to bind an employee after the employment contract has ended, for example, limiting who they can work for or where they can work, they must include a specific written express term in the contract, often called a restrictive covenant. 



There are limits on the extent to which an employee can be bound by a restrictive covenant. A term that is a restraint of trade is unenforceable, but a term that protects an employer’s legitimate business interests is likely to be allowed. 



A restrictive covenant will only be enforced if it is reasonable. This will depend on:


• the extent to which it tries to limit the employee’s activities;



• the geographical area covered; and



• how long it lasts for.



A term that is too wide will not be enforced.



Employees who are dismissed (actually or constructively) in fundamental breach of contract are released from ongoing obligations under that contract except their duty of confidentiality (see Chapter 10: Dismissal). This generally means that any restrictive covenants can no longer be enforced (Rock Refrigeration v Jones [1996] IRLR 675). 



Even if a restrictive covenant is valid, an employer that wants a court to order the employee to obey the restrictive covenant (through an order known as an injunction) must show that it will suffer some harm if the order is not made (Jack Allen (Sales & Service) Ltd v Smith [1999] IRLR 19).