Restrictive covenants after Tillman in England and Wales

Restrictive covenants remain one of the most litigated corners of English employment law, and the reason is simple: a clause that looks watertight on the page can collapse the moment an employer tries to enforce it. Since the Supreme Court decided Tillman v Egon Zehnder Ltd [2019] UKSC 32, the question every employer should ask is not only whether a covenant is reasonable, but whether a single over-wide phrase could be cut out to save the rest. This guide is for business owners, HR managers and directors in England and Wales who rely on post-termination restrictions to protect clients, staff and confidential information, and who want to know whether the covenants sitting in their contracts would actually hold up.

What Tillman v Egon Zehnder actually decided

Ms Tillman was a senior recruitment executive whose contract barred her, for six months after leaving, from being "directly or indirectly engaged, concerned or interested in" any competing business. When she resigned in 2017 and moved towards a competitor, her employer sought an injunction. She argued the covenant was an unreasonable restraint of trade because the word "interested" was wide enough to stop her holding even a tiny shareholding in a rival, which made the whole clause void.

The Supreme Court agreed that "interested" did cover a minor shareholding, and that this made the covenant wider than reasonably necessary. The interesting part is what happened next. Rather than striking down the entire non-compete, the Court removed the two offending words "or interested" and left the remainder standing and enforceable. This was the first employee-competition case to reach the UK's highest court in roughly a hundred years, and it settled how far a judge may go in rescuing a badly drafted clause. The practical lesson is uncomfortable for employers: you may win the legal argument and still lose the protection you thought you had bought.

The blue pencil and the three-part severance test

The mechanism the Court used is known as the blue pencil test, and Tillman confirmed the modern approach to it. Severance is only available where three conditions are met, all of which the employer must satisfy. First, the unenforceable wording has to be capable of being removed cleanly, without adding to or rewriting what is left. A judge will delete words; a judge will not redraft your clause to make it reasonable. Second, the remaining terms must still be supported by adequate consideration, which in the ordinary post-termination situation is rarely an obstacle because the employer is not asking to reduce the employee's pay. Third, and most importantly in practice, removing the offending words must not generate any major change in the overall effect of the restraints taken together.

That third limb is where drafting discipline pays off. In Tillman, cutting "or interested" left a coherent, narrower non-compete that still did its job, so severance did not distort the bargain. A clause stuffed with interlocking prohibitions is far more fragile, because pulling one thread can unravel the commercial logic of the whole restriction and defeat the third condition. The Court also approved the practical, rule-of-reason approach to construing these clauses, and expressly moved away from older authority that had made severance harder. For the underlying statutory backdrop against which these contractual terms operate, the framework of the Employment Rights Act 1996 remains the reference point, and the government's own guidance on non-compete reform sets out the current policy direction in its working paper on reform of non-compete clauses.

Is your covenant still enforceable? The reasonableness test in practice

Tillman did not change the first-order rule, which is that a restrictive covenant is void as a restraint of trade unless the employer shows it protects a legitimate business interest and goes no further than reasonably necessary. Legitimate interests are a closed category in substance: trade connections with clients and suppliers, confidential information and trade secrets, and stability of the workforce. A covenant that simply tries to stop ordinary competition, with no interest behind it, fails at the first hurdle whatever the wording.

Reasonableness is then judged on scope of activity, duration and geographic reach, assessed at the date the contract was made rather than with hindsight. A six-month non-compete for a junior administrator will usually be struck down, while the same period for a director with deep client relationships may well stand. The single most common drafting error is applying identical covenants across every seniority level, which almost guarantees that the clause is unreasonable for the more junior population and therefore vulnerable. In practice, most enforceable covenants also carry a garden leave set-off, reducing the restricted period by any time the employee spent on garden leave, because courts dislike stacking one restriction on top of another.

There is a further point that Tillman highlights and that many contracts still ignore. Because "interested in" was read as capturing shareholdings, well-drafted covenants now routinely carve out minor shareholdings in listed companies, so that the clause never reaches into territory a court would find unreasonable. Building that exclusion in from the start is far safer than hoping a judge will later reach for the blue pencil.

Where non-solicitation and confidentiality fit in

Employers often treat the non-compete as the crown jewel, but it is the hardest covenant to enforce and the easiest to lose. Non-solicitation and non-dealing clauses, which stop a departing employee approaching or doing business with the employer's clients, are usually more defensible because they target a narrower, clearly legitimate interest. A well-layered contract does not rely on a single all-or-nothing restriction; it combines a tightly drawn non-compete with non-solicitation, non-dealing and non-poaching of staff, each independently drafted so that the failure of one does not drag down the others.

Confidentiality obligations sit slightly apart. They are assessed separately from restraint-of-trade principles and are generally upheld more readily, provided they are not so broad that they effectively prevent the employee from working at all. The strategic implication is that even if a non-compete falls, a properly drafted confidentiality clause and a non-solicitation clause can still protect the core of the business. When you review your restrictions alongside your wider employment contracts, the aim is a set of independent, severable obligations rather than one monolithic paragraph. The same discipline applies to more flexible arrangements such as a fixed-term contract or a contractor agreement, where the enforceability analysis differs but the drafting logic is the same.

The reform that has not yet happened

There is a persistent myth that non-compete clauses in England and Wales are now capped at three months. They are not. The previous government announced in 2023 an intention to introduce a statutory limit of three months, but no legislation followed before the 2024 general election. The current government reopened the question through a working paper, published in late 2025, which invited views on options ranging from a statutory cap of a few months, to a cap varying by employer size, to an outright ban on non-competes, with responses closing in February 2026. None of this is law, and no implementation timetable has been set.

The takeaway for employers is to plan rather than panic. Existing common law principles continue to govern, which means a covenant is still tested on reasonableness and can still be saved or sunk by the Tillman severance rules. It is worth reviewing restrictions now so that, whatever form any future cap takes, your contracts already rely on the shortest genuinely necessary period. Where covenants overlap with a departure, they usually need to be addressed head-on in a settlement agreement, which can confirm, waive or vary the restrictions as part of an agreed exit.

Drafting covenants that survive on Captain.Legal

Because English law will not rewrite a defective covenant, the safest protection is to draft narrowly from the outset. When you build an employment contract on Captain.Legal, you set the covenants at the point that matters, choosing the restricted activities, the duration and the population they apply to, so that a graduate joiner and a sales director are not saddled with the same clause. The document prompts you to separate non-compete, non-solicitation, non-dealing and confidentiality into distinct obligations, which is exactly the structure that lets a court sever one without collapsing the rest.

The generator also lets you fold in the refinements that Tillman made unavoidable, including a carve-out for minor shareholdings and a garden leave set-off, and it produces the finished contract in editable Word and clean PDF so your solicitor can fine-tune the wording for senior hires. For directors and shareholders, the same principles increasingly surface in company documents, so it is worth aligning the employment restrictions with your shareholders' agreement and, where relevant, an LLP agreement so that the same person is not bound by inconsistent restraints in different documents.

Common mistakes that make covenants unenforceable

The first and most frequent error is the copy-paste covenant applied to everyone regardless of role. What is reasonable for a board director is oppressive for an apprentice, and a single unreasonable application can taint the standard clause across the workforce. The second is drafting to the maximum rather than the necessary, on the mistaken assumption that a court will simply trim an over-wide clause back to something sensible. After Tillman a judge may delete offending words, but only where the three-part test is met, and a clause designed to be cut is a clause that may not survive the third limb.

A third recurring problem is defining "competing business" so broadly that it captures activity the employer has no genuine interest in restricting, which is precisely the trap the word "interested" created in Tillman. The fourth is ignoring the assessment date: reasonableness is judged when the contract is signed, so imposing a senior-level covenant on someone at the start of a junior role, in the hope they will be promoted, tends to backfire. Finally, employers routinely forget that a non-compete is only one tool. Relying on a single aggressive restriction, with no fallback non-solicitation or confidentiality clause, means that if the non-compete fails the business is left with nothing.

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