Restrictive Covenants Agreement UK | Word & PDF Template

A restrictive covenants and confidentiality agreement is a contract that restricts what a former employee can do for a defined period after their employment ends. It sits in the family of post-termination restrictions, sometimes called PTRs, and it differs from the confidentiality clause buried in a standard employment contract in two ways: it is broader, and it is built to survive termination rather than lapse with it.

The distinction worth understanding is between the four instruments the document combines. A non-compete prevents the leaver from working for, or setting up, a competing business. A non-solicitation covenant stops them approaching your clients or staff to lure them away. A non-dealing covenant goes further than non-solicitation : it bars the leaver from doing business with your clients even when the client made the first approach. The confidentiality undertaking protects information that does not qualify as a trade secret but is still commercially sensitive, such as pricing models, supplier terms or pipeline data.

People often confuse a restrictive covenant with a simple garden leave clause. They are not the same. Garden leave keeps someone on the payroll and out of the market during their notice period; a restrictive covenant bites only after employment has ended. Most well-advised employers use both, because time spent on garden leave is usually set off against the covenant period, and a court will expect that overlap to be accounted for when judging whether the total restraint is reasonable. Our full-time UK employment contract template already contains a baseline set of these clauses, but a dedicated agreement gives you stronger, role-specific drafting.

Restrictive covenants in England and Wales are governed not by a single statute but by the common law doctrine of restraint of trade, a body of case law stretching back more than a century. The starting position is hostile to the employer: any covenant that restricts a former employee's freedom to work is void as an unreasonable restraint of trade unless the employer can show it protects a legitimate business interest and is no wider than reasonably necessary to do so. The three recognised legitimate interests are trade connections (client and supplier goodwill), confidential information, and stability of the workforce. A covenant drafted to suppress ordinary competition, rather than protect one of those interests, fails.

The leading authority is Tillman v Egon Zehnder Ltd [2019] UKSC 32, the first restrictive covenant case to reach the Supreme Court in roughly a century. The court confirmed that a restraint will be enforced only where it protects a legitimate interest, such as confidential information or customer and staff connections, to a reasonable extent. Tillman also revived the blue pencil test: where part of a covenant is too wide, a court may strike out the offending words and enforce the remainder, but only if the deletion needs no rewriting and does not change the overall character of the restraint. A restriction that is obviously too broad cannot be rescued by severance, and the courts continue to take a cautious approach to cutting down post-employment restraints. The practical lesson is blunt : sloppy drafting is not saved by a judge's goodwill.

Reasonableness is judged at the date the covenant was entered into, not the date you try to enforce it. A later promotion will not turn an invalid covenant into a valid one, so covenants should be refreshed whenever an employee's role materially changes. Trade secrets carry an additional layer of statutory protection under the Trade Secrets (Enforcement, etc.) Regulations 2018, which sit alongside the common law duty of confidence; the official text is published by the National Archives' record of the Trade Secrets Regulations 2018. One point every employer should track: the Department for Business and Trade opened a consultation in November 2025 on capping or reforming non-compete clauses, with options ranging from a statutory limit to an outright ban. No legislation has been enacted, so the common law rules above remain fully in force, but the direction of travel is towards tighter control. Our UK settlement agreement template is the right tool when covenants need to be reaffirmed or renegotiated on exit.

The clearest trigger is a senior hire with access to your client book. When you bring in a sales director, an account lead or a practice head, the value they can walk out with is your customer relationships, and a non-solicitation and non-dealing package is the protection that actually holds in court. Reasonableness scales with seniority : a covenant a tribunal would strike down for a junior administrator may be entirely defensible for a board-level executive whose knowledge of the business is deep and current.

The second common scenario is the technical or product role. An engineer, a developer or a head of R&D holds confidential know-how that a confidentiality undertaking alone may not fully contain, which is why a short, tightly scoped non-compete is often the only effective shield. The third is the team-build risk : where one leaver could trigger a wave of resignations, a staff non-solicitation covenant protects workforce stability, one of the three interests the courts expressly recognise.

Two edge cases deserve a flag. First, covenants imposed mid-employment without fresh consideration are vulnerable; if you add restrictions to an existing employee, give something of value in return, such as a pay rise, a bonus or a promotion, and record it. Second, you cannot enforce a covenant against an employee you have wrongfully dismissed : a repudiatory breach by the employer releases the leaver from the restraints entirely. This is precisely why a clean, documented exit matters, and why pairing covenants with a proper UK disciplinary procedure and warning letter pack protects the enforceability of everything that follows.

• The non-compete covenant is drafted with an express duration, a defined activity, and a carve-out permitting passive minority shareholdings. That carve-out is not optional padding; it is the precise drafting failure that nearly sank the employer in Tillman, where the word "interested" was read to bar even a single share in a listed rival.
• The non-solicitation covenant is limited to clients with whom the employee personally dealt, and to a backstop period before termination (commonly the final twelve months). A covenant protecting clients the leaver never met is almost always struck down as wider than necessary.
• The non-dealing covenant closes the gap left by non-solicitation by prohibiting business with protected clients regardless of who approached whom. Courts scrutinise these closely, so the template ties the restriction to clients the employee had material contact with rather than your entire customer base.
• The staff non-solicitation covenant restrains the leaver from poaching colleagues, and is narrowed to employees of a defined seniority with whom they worked, not the whole payroll. Blanket "no poaching anyone" wording is a classic over-reach.
• The confidentiality and trade secrets undertaking survives termination indefinitely for true trade secrets and for a defined period for merely confidential information, mirroring the dual protection under the common law duty of confidence and the Trade Secrets Regulations 2018.
• The garden leave and set-off provision allows time spent on garden leave to count against the covenant period, the mechanism a court expects to see when assessing whether the total restraint is proportionate.

This agreement is drafted for England and Wales, where the restraint of trade doctrine and the Tillman line of authority apply directly. The reasonableness test, the legitimate-interest categories, and the blue pencil approach to severance are all features of English common law as developed through the High Court, the Court of Appeal and the Supreme Court.

Scotland operates a separate legal system, and while the underlying principles of restraint of trade are broadly similar, Scottish courts apply their own procedure and their own body of case law. Enforcement is pursued through the Court of Session rather than the High Court, and a covenant litigated in Edinburgh will be tested against Scottish authority. Before relying on this template for a Scottish-based employee, take Scottish-qualified advice on the specific covenants.

Northern Ireland likewise has its own court structure and statutory framework, and although the common law on restrictive covenants tracks the English position closely, the governing-law and jurisdiction clauses need to reflect Northern Irish law where the employee is based there. In every case the template lets you set the governing law expressly, which is the single most important choice when staff are spread across the UK's three jurisdictions. For cross-border businesses managing standalone confidentiality alongside covenants, the UK NDA and business confidentiality templates in our business category complement this agreement well.

You start by identifying the employer and the employee, then selecting whether the agreement is a fresh standalone deed or a schedule that varies an existing contract. From there the template asks you to set the role seniority, because that single choice calibrates how aggressive your covenants can reasonably be. You then choose which of the four covenants you actually need, since a court reads a kitchen-sink approach as evidence that none of the restraints was carefully considered.

Next you define the duration of each restriction, the client or geographic scope, and the backstop period for non-solicitation and non-dealing. The form prompts you to record any fresh consideration where covenants are being added mid-employment, and to align the covenant period with any garden leave so the set-off is documented. You finish by setting the governing law and jurisdiction to match where the employee is based. The document then generates in editable Word and clean PDF, ready to sign. If you are also resetting wider employment terms, our UK part-time employment contract template pairs naturally with a covenant schedule.

The most expensive error is reaching for the widest possible drafting in the belief that a court will simply trim it back. It will not. A judge applies the blue pencil only to remove discrete offending words, never to rewrite a covenant into something reasonable, and a restraint that is plainly too broad falls in its entirety. Employers also routinely forget that reasonableness is fixed at the moment the covenant is signed, so the senior manager promoted three times since signing a junior contract may be bound by nothing at all. Refresh covenants on promotion, and give consideration each time you tighten them.

A second cluster of mistakes concerns scope. Protecting clients the employee never dealt with, restraining the poaching of staff they never worked alongside, or imposing a two-year non-compete where six months would protect the interest, each invites a finding that the covenant is punitive rather than protective. Length is the most over-reached variable of all : most enforceable non-competes run three to twelve months, and anything longer needs a genuine justification tied to how long your confidential information stays valuable. Finally, do not assume covenants survive a botched exit. Dismiss someone in repudiatory breach of their contract and you release them from every restraint, which is why a defensible termination process protects far more than the dismissal itself.