UK: Restrictive Covenants – What Can An Ex-Employer Do To Stop You Working For A Competitor?

Last Updated: 25 January 2019
Article by Susan Hopcraft

The starting point is that no person can be restrained from earning a living. This is a long-standing principle of English law that the courts are generally careful to uphold.

The exception is for those who have signed a restrictive covenant when joining an employer, agreeing to post-employment restrictions that are strictly no wider than absolutely necessary to protect that employer's legitimate business interests. Employment contracts often contain these types of clause, particularly for more senior staff and in professional services. The question then becomes: are they enforceable?

What types of restriction might there be?

The usual types of restrictions are those that try to stop you from working for a competitor, working for clients that you dealt with at the previous employer, and/or from even trying to contact those clients you worked for. The restrictive covenant can include all three: a 'non-compete', a 'non-deal' and a 'non-solicit'. The employer tends to want all three but if, by doing that, the covenant becomes too wide the employer is liable to lose all protection, because the clause could be deemed unreasonably wide and therefore unenforceable.

The restriction can last for any length of time but, the shorter it is, the more likely a court will consider it to be reasonable. 12 months is at the dubious end of the scale, although for a very senior employee that might be upheld.

The justification is that the ex-employer will consider they have invested in developing the employee's skills and the client base and want to protect the return on that investment. The professional employee often considers the client base belongs to them, particularly when the clients were brought to the ex-employee with them, which is a real issue in the IFA world for example.

But if you are prevented from even working at a competitor, and your entire career has been in a specific role that means any new job is bound to be at a competitor, that sort of restriction can leave an employee without a salary at all for a period. The court has to balance the unfairness of that with the business's wish to protect its interests.

Non-compete clauses – a real example

A recent case considered the width of a non-compete clause. This was in the world of recruitment consultancy.

In January 2004 Ms Tillman joined EZ as a Consultant with an employment contract containing post-termination restrictive covenants. In 2006 she was promoted to Principal and in 2009 to Partner. In 2012 she was appointed as co-Global Head of the Financial Services Practice Group. In January 2017 she gave notice, was put on garden leave and then on 30th January 2017 her employment was terminated with immediate effect.

She was very senior at the point of her departure but was relatively valuable and senior at the point of arrival too, which is the time when the reasonableness of the covenant is assessed.

Ms Tillman wanted to move to another recruitment consultant but EZ wanted to enforce the six month non-compete covenant.

It was in fairly standard words and stated:

"13.2 You shall not without the prior written consent of the Company directly or indirectly, either alone or jointly with or on behalf of any third party and whether as principal, manager, employee, contractor, consultant, agent or otherwise howsoever at any time within the period of six months from the Termination Date:

13.2.3 directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which were carried on at the Termination Date or during such period."

Ms Tillman argued that the clause was wider than reasonably required for the protection of EZ's interests, as it prevented her from engaging in activities anywhere in the world. She also argued that "interested in any business carried out in competition" included having a minor shareholding in a competitor, which was a restriction that was wider than reasonably necessary. She did not necessarily want to become a shareholder but that was the 'hook' that she used to try and have the covenant declared invalid.

First judgement

The first judge decided in May 2017 that the covenant did not prevent her from becoming a shareholder in a competitor. He relied on another clause in the contract that explicitly prevented shareholdings of more than 5% in competitors during employment. He used that to infer that, because the covenant did not explicitly refer to shareholdings, an 'interest' should not be read as including shareholdings. Had it been intended to prevent shareholdings, he reasoned, it would have dealt with that expressly.

The covenant was not, therefore, in unreasonable restraint of trade and was enforceable. The judge granted an injunction restraining Ms Tillman from working for the new company for the six month period in the covenant.

Appeal decision

The case went to appeal and the appeal decision was published in July 2017, at a point when the six months was almost up, although the outcome is no doubt important in relation to legal costs and damages payable by EZ for having wrongfully prevented Ms Tillman from working.

The appeal judges considered the more natural meaning of "interested in" and decided that clause 13.2.3 did prohibit shareholdings and was impermissibly wide and in restraint of trade. Since the offending words could not easily be severed from the rest of the covenant the whole clause was unenforceable.

Where are we?

That is not an end to it though because in February 2018 the Supreme Court agreed to hear an appeal, which should take place in January 2019.

It may seem strange that the clause, on the current outcome, is unenforceable just because of a limitation on holding shares, when an employee may not even intend to acquire shares. Public policy against restraint of trade is powerful though. In the words of Longmore LJ "the law which avoids contracts in unreasonable restraint of trade is based on the wide public policy of promoting competition and protecting employees from too readily abandoning the exercise of their right reasonably to compete after termination. In those circumstances the merits of individual cases must inevitably take second place."

Those employers who include non-compete covenants in their contracts with senior employees are likely to want to revisit their standard form once the Supreme Court has given its view.

Likewise any employee who has a covenant in similar words to the EZ one (and very many will) may want to hear what the Supreme Court says. If an employer proposes to try and amend it later this year, think very carefully before agreeing.

We have expertise in restrictive covenants and can advise on enforceability. We acted for the five ex-Affinity IFAs and successfully defended the claim for £10m brought against them in 2016 for alleged breach of 12 month covenants. The claim was withdrawn part way through trial and we recovered indemnity costs for our clients.

[Further reading: Tillman v Egon Zehnder Limited [2017] EWCA Civ 1054]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions