In a recent dispute involving two Formula 1 powerhouses, a March 2025 ruling from the Court of Modena ordered former Ferrari chassis technical director, Enrico Cardile, to immediately cut all ties with his new team, Aston Martin, until 18 July.
Cardile had been announced as Aston Martin's incoming chief technical officer the previous July and was set to join the team this season (although no official start date was ever announced). However, Ferrari sought legal action in the Italian courts, claiming that by engaging in early collaboration with Aston Martin before his agreed start date and the end of his gardening leave period, Cardile was violating his "non-compete commitment" with Ferrari. Ferrari contended that Cardile's early involvement might give Aston Martin an unjustified competitive advantage, potentially inflicting "irreparable harm" on Ferrari, particularly due to the sensitive nature of Formula 1 technical development. The court agreed, barring Cardile from further involvement with Aston Martin until his period of garden leave ends.
But what exactly are "garden leave" and "non-compete" clauses? This article breaks down "post-termination restrictions" (contractual rules that continue to bind employees even after they leave an employer) and "garden leave", exploring how they work in sports and the key things to watch out for.
What are "post-termination restrictions"?
"Post-termination restrictions" (PTRs), also known as "restrictive covenants", are clauses commonly found in employment contracts designed to protect an employer in the event that their employee leaves the business. These clauses typically aim to prevent the former employee from:
- Disclosing sensitive business information about the employer or its clients (confidentiality)
- Working for a competitor (non-compete)
- Contacting and approaching the business's clients, customers, suppliers or employees (non-solicitation)
- Conducting business with the company's existing clients, customers or suppliers (non-dealing)
- Poaching the company's customers or staff (non-poaching)
Under English law, everyone has the freedom to trade, and it is generally unlawful to restrict people's activities. Courts traditionally view PTRs as "in restraint of trade" and, for public policy reasons, will not enforce them unless certain conditions are met. Employers can only impose restrictions on trade in limited circumstances, specifically when the restrictions are necessary to protect the employer's legitimate business interests.
So, what does this mean? Any clause must be reasonable in terms of scope, duration, and geographic location, meaning it has to be quite narrowly drafted. Additionally, it must protect a legitimate business interest. The court has identified a few legitimate business interests, including:
- Client or customer connections, which can sometimes include prospective clients or customers.
- Confidential information and trade secrets, such as customer lists, price lists, costings, financial details, and terms and conditions of contracts with key suppliers. (For example, in Formula 1, technical know-how can make or break a team's success in a season as races are often decided by mere tenths of a second. Ensuring the protection of intellectual property and trade secrets and controlling the timing of staff movements between teams is therefore crucial.)
- The stability of the workforce in highly competitive industries.
- Client goodwill associated with a business.
However, this list is not exhaustive, and case law has recognised that employers may be able to justify other legitimate interests.
What is "garden leave"?
"Garden leave" is a contractual provision that can be used as an alternative, or in addition to, the PTRs described above (although typically contract terms provide for them to be offset to ensure the aggregated period of restraint does not go beyond what is reasonable and justified).
When an employee is put on "garden leave" during their notice period, they remain employed by the company, but they are not required to attend work or perform their usual duties, effectively keeping them out of the business and away from confidential information and clients. Because their employment continues during this period their duty of fidelity still applies, and they are not permitted to work for anyone else.
In fact, "garden leave" will often be the most effective form of restraint (in practical terms), as it keeps the employee out of the market and is much easier to enforce than a non-compete restriction (which entails convincing a Judge that there is a legitimate interest to protect) but this obviously needs to be weighed against the cost of continuing to pay a key employee for doing nothing. In fact, "garden leave" is exactly the restraint Ferrari used to delay Cardile from joining Aston Martin.
PTRs in a sporting context
The PTRs a sports organisation includes in its employment contracts vary greatly. These depend on the specific employee, the type of sport, the industry landscape, and the organisation's goals. There is no one-size-fits-all approach.
For instance, in the UK sports scene, it's rare to find non-compete clauses in the employment contracts of professional athletes. Typically, athletes sign fixed-term agreements with sports clubs or organisations, and once these contracts expire, they are free to join other clubs or organisations, including direct competitors, without any delay.
Non-compete clauses are more commonly seen in contracts for senior executives, scouts, analysts, engineers etc and there is a growing trend of clubs including non-compete clauses in the contracts of managers and coaches.
The purpose of a non-compete clause is usually to safeguard the organisation's confidential information, the rationale being that unless the departing employee is prevented for a period of time from joining a rival, there would be no effective way to prevent that employee from sharing the organisation's technical innovations and proprietary information with their new employer. The non-compete duration will usually therefore correspond to the confidential shelf-life of the information and innovations the organisation is seeking to protect – in F1 and other sports like cycling this might stretch further than in, say, football where it be difficult to justify spanning more than one or two transfer windows.
Non-poaching clauses are also common in sport although with notable exceptions, for instance in football and rugby it generally suits everyone for managers/head coaches to take that coaching/backroom teams with them to their next club.
Key considerations for sports organisations
When considering PTRs in employment contracts, it is crucial to keep several key factors in mind:
- Why do you need a PTR? Think about whether there is a genuine business reason for the restriction. Are you aiming to protect confidential information or technical data? Is it to safeguard your relationships with sponsors, suppliers, or clients? Is it to maintain the stability of your team personnel? Or perhaps you are trying to stop key staff from taking insider knowledge to a competitor? Keep in mind that courts will not enforce a clause just to block competition – it must protect something generally valuable.
- How reasonable is the PTR? Evaluate the seniority of the employee, the extent of their access to confidential information, and the level of client contact they have. A one-size-fits all approach does not work – the restrictions must be tailored to the individual employee's role and level of access and must not go beyond what is necessary in terms of duration, geographical scope and prohibited activities. Consider if the individual truly poses a risk. It might be more justifiable for senior executives or coaches, but less so for administrative or junior support staff. Be cautious, as blanket policies for all staff may not hold up.
- Interaction with "garden leave". You can include a garden leave clause along with another type of PTR in an employment contract. However, the aggregate period of the garden leave and the other PTRs should not exceed the maximum period for such restraints to be enforceable (i.e. it must be reasonable in duration). If the notice period is short garden leave on its own will not offer much protection. A longer period of garden leave will be expensive.
- Review and update regularly. Employment contracts should evolve with the employee's role. If an individual is promoted or gains access to more sensitive information, update their contract and PTRs to reflect their new risk level. This can be done by entering into a new contract or by agreeing a variation of the terms in writing with the employee.
- Jurisdictional variability. International sports organisations or multi-club setups must consider where their employee is based. In Europe, non-compete clauses are recognised, but subject to rules and tolerances that differ from country to country. Since Brexit, enforcing these clauses in EU jurisdictions has also become more complex. Some overseas jurisdictions have even banned non-compete clauses outright (e.g. California) while others require non-compete periods to be paid. Lewis Silkin, through the Ius Laboris network, is well positioned to provide expert advice on international legal matters.
- Make sure you define your terms clearly. Vague or poorly worded restrictions are open to challenge. Be precise in defining terms such as "competitor", "confidential information", and "solicitation".
- Cost. In most countries, including the UK, it is important to remember that enforcing these restrictions through the courts is expensive so litigation will usually only arise where there is much at stake – as Ferrari clearly perceived with Cardile's departure to Aston Martin – but the threat of a claim or potential injunction will often be enough to force a compromise.
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.
