Restrictive Covenant Agreement Template for England and Wales

A Restrictive Covenant Agreement protects businesses by limiting what employees can do after they leave their job. These legally binding contracts typically stop former staff from working with competitors, poaching clients, or using confidential information for a set time period within specific geographical areas.

Under English law, these agreements must be reasonable to be enforceable. Courts balance employer protection against an individual's right to earn a living. Key factors include the length of restrictions, the area they cover, and proof that they safeguard legitimate business interests rather than simply prevent competition.

Use Restrictive Covenant Agreements when hiring employees who will have access to valuable business assets like client relationships, trade secrets, or sensitive data. These agreements are especially crucial for senior roles, sales positions, and technical experts who could seriously harm your business if they left to join competitors.

Timing matters - introduce these agreements at the start of employment or during promotions when you have proper consideration. Getting them signed later can be legally tricky in English courts. Focus on roles where you can prove a genuine need to protect specific business interests, as blanket restrictions across all staff levels rarely hold up.

• Confidentiality And Restrictive Covenant Agreement: Combines post-employment restrictions with robust confidentiality obligations, commonly used for employees with access to sensitive information and client relationships.
• Restrictive Covenants Shareholders Agreement: Tailored for business owners and shareholders, protecting company interests with stronger restrictions than typical employee agreements, including provisions for share ownership and business sale scenarios.

• Employers: Draft and enforce Restrictive Covenant Agreements to protect their business interests, often through their HR departments or legal teams.
• Senior Executives: Commonly bound by extensive restrictions due to their access to sensitive information and strategic relationships.
• Sales Staff: Often subject to client non-solicitation clauses to protect customer relationships and business continuity.
• Employment Lawyers: Draft, review, and advise on enforceability of these agreements, ensuring they meet legal requirements.
• Courts: Evaluate and enforce reasonable restrictions while striking down overly broad or unfair terms.

• Employee Role Assessment: List key responsibilities, access to confidential information, and client relationships that need protection.
• Geographic Scope: Map out realistic territory restrictions based on your business operations and market presence.
• Time Periods: Determine reasonable restriction durations, typically 6-12 months for most roles in England.
• Business Interests: Document specific trade secrets, customer relationships, and other assets requiring protection.
• Consideration: Ensure proper benefits or compensation are offered to make the agreement legally binding.
• Document Generation: Use our platform to create a legally-sound agreement that includes all required elements.

• Party Details: Full legal names and addresses of employer and employee, with clear definitions of roles.
• Restricted Activities: Specific prohibited actions like competing, soliciting clients, or poaching staff.
• Duration: Clear timeframes for restrictions, typically 6-12 months post-employment.
• Geographic Scope: Precise definition of restricted territories or regions.
• Consideration: Statement of benefits or compensation making the agreement binding.
• Severability Clause: Ensures partial enforcement if some terms are found invalid.
• Signature Block: Space for dated signatures, with witness provisions if needed.

A Restrictive Covenant Agreement differs significantly from a Business Acquisition Agreement in scope and purpose, though both protect business interests. While restrictive covenants focus on limiting employee activities post-employment, business acquisition agreements govern the entire sale process of a company.

• Timing and Duration: Restrictive covenants typically last 6-12 months after employment ends; acquisition agreements cover the transaction period and often include longer post-completion obligations.
• Party Relationship: Restrictive covenants govern employer-employee relationships; acquisition agreements deal with buyer-seller dynamics.
• Scope of Protection: Restrictive covenants target specific activities like competition or client solicitation; acquisition agreements cover broader aspects including assets, liabilities, and warranties.
• Enforcement Approach: Courts scrutinize restrictive covenants more strictly, requiring reasonable limitations; acquisition agreements enjoy broader enforcement as commercial contracts between equal parties.