Post-termination restrictions – what to do if your contract says you are subject to certain restrictions in employment after you leave your job

Post-termination restrictions (also known as PTRs or restrictive covenants) are clauses that prevent you from doing something after you have left your job in the context of employment, for example joining a competing company.

This page provides an overview of the law on PTRs, and gives some guidance on what you can do if you are a parent with caring responsibilities who has this type of clause in your employment contract.

Types of PTRs

There are different types of PTRs, including the following common ones:

1. Non-compete restrictions: These say that you must not work for or set up a competing business for a certain amount of time. These clauses tend to be the hardest for an employer to enforce because they have a big impact on your freedom to work and to therefore earn.
2. Non-solicitation (or non-poaching) restrictions: These say that you must not solicit (or poach) certain clients, customers, or key employees away from the business for a certain amount of time.
3. Non-dealing restrictions: These say that you must not have any dealings with certain clients, customers, or key employees.

Check your employment contract to see how long the PTRs last. Usually this will be 3 or 6 months, but it could be up to 12 months in special cases – depending on your seniority at your old employer, or the type of work that you did and the industry you work in.

Is the PTR enforceable?

The general rule is that PTRs will be void for being in “restraint of trade” and contrary to public policy, unless the employer can show that:

• it has a legitimate proprietary interest that it is appropriate to protect; and
• the clause goes no further than necessary to protect that legitimate interest, having regard to the interests of the parties and the public interest.
  

You should look carefully at the wording of the PTR in your employment contract, and consider whether it is reasonable or not. The PTR might be necessary for your employer to:

1. protect its connections with those customers, clients or suppliers whom you had lots of contact with during your employment;
2. protect its trade secrets and confidential information that you had access to during your employment; or
3. maintain the stability of its workforce by making sure that you do not encourage key employees to leave the company.

Whether or not a PTR will be enforceable depends on the facts, including the sector that you work in, how senior you are, and what information or connections you had access to during your employment. It ultimately depends on how much harm you could do to your employer’s business if you leave to a competitor or solicit some of its customers, clients, suppliers or employees.

If you have a PTR in your employment contract and you are considering doing something that you think will breach the PTR, we recommend that you take legal advice first. The LawWorks website has information on finding a legal adviser.

Note the following guidelines:

• PTRs should always be limited in time. Usually they last for 3 or 6 months after termination. Occasionally they can last for up to 12 months (e.g. if you are very senior, or if you have access to very secretive information that will not become out of date for a very long time). The length of PTRs should be reduced by the length of any time that you spend on garden leave.
• PTRs should usually be limited in geographical scope. For example, if you work for a bank in a particular town and all of the customers come from that town, it would be unreasonable to have a PTR which says that you cannot work for any bank in the UK. It might be reasonable to restrict you from working for another competing bank in the particular town for a short period, if you have trade secrets or confidential information that you could share with your new employer.
• Employers should not include all PTRs for all staff regardless of their particular role. For example, PTRs that restrict you from soliciting clients should only be included in your contract if you have a client-facing role.
• PTRs that restrict you from soliciting clients, customers or suppliers should usually be limited only to those clients, customers of suppliers who you had material dealings with, or about whom you had confidential information about, in the last 12 months of your employment.
• Similarly, PTRs that restrict you from soliciting employees should usually be limited only to key senior employees who you had material dealings with, or about whom you had confidential information about, in the last 12 months of your employment.
• PTRs must be enforceable at the time that they are entered into, so you’ll need to look back at the job and the information that you and your employer had at the time that you entered into your contract to determine whether a PTR is reasonable.

Can you argue that PTRs should not apply?

Yes. If your employer asks you to sign a new contract that contains PTRs, you could push back and say that you do not think that that the PTRs are reasonable. You should explain why you do not think that the PTRs are reasonable – e.g. because you do not have access to confidential information or trade secrets, or the clause is too widely drafted. For example, with regard to the duration of the restriction or the location, business or employees it applies to. An employer should be giving you extra consideration (e.g. a bonus or a pay rise) in return for you signing up to PTRs if they are asking you to sign a new contract.

If you already have PTRs in your contract and you do not think they are reasonable, you could ask your employer to agree in writing to waive the PTRs. This would count as a change to your terms and conditions of employment. Employees often request this when they are negotiating their exit from a company, especially if the company offers them a settlement agreement.

What happens if you breach a PTR?

If your old employer wanted to enforce a PTR in your old contract, they would need to go to court for an injunction to stop you breaching the PTR. Injunctions are granted at the discretion of the court, which will look at what is fair in the circumstances. It is expensive to go to court, so usually companies only do this if the particular individual is really going to cause serious damage to its business by breaching the PTR. If the injunction is not granted, your old employer could still bring a claim against you in court for breach of contract but these cases tend to span a longer time period. 

If your old employer thinks that you are going to breach a PTR in your contract, they might write to you to warn you not to and threaten to bring legal action if you do. Your old employer might also write to your new employer to tell them that you have the PTR in your contract. We recommend being open with your new employer about what PTRs you are subject to, so that this does not come as a surprise to them. New employers often ask for this information when you apply anyway.

This advice applies in England and Wales. If you live in another part of the UK, the law may differ. Please call our helpline for more details. If you are in Northern Ireland you can visit the Labour Relations Agency or call their helpline Workplace Information Service on 03300 555 300.

If you have further questions and would like to contact our advice team please use our advice contact form below or call us.

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