Confidentiality and Restrictive Covenants
Confidentiality clauses and restrictive covenants are important tools for protecting business interests such as trade secrets, client relationships and confidential information. However, they must be drafted carefully and applied consistently to be legally enforceable in the UK.
Key Points for Employers
You should ensure that:
-
confidentiality and restrictive covenants are clear, reasonable and tailored
-
clauses are necessary to protect legitimate business interests
-
employees receive covenants at a sensible stage (e.g., upon hire or promotion)
-
contracts and policies align with current UK law
-
documentation and evidence support enforceability
-
enforcement strategy takes into account legal risk and employee rights
Correctly drafted clauses protect business value and reduce dispute risk.
What Are Confidentiality Clauses?
A confidentiality clause in an employment contract prohibits an employee from disclosing or misusing confidential business information both during and after employment.
Confidential information may include:
-
trade secrets
-
business plans and pricing
-
customer and supplier details
-
financial information
-
intellectual property not otherwise protected
When is Confidentiality Important?
Confidentiality clauses are particularly valuable where employees have access to sensitive information, such as in:
-
commercial negotiations
-
product or software development
-
HR and compensation data
-
strategic planning
How Should Confidentiality Clauses Be Drafted?
Effective confidentiality clauses should be:
-
specific about what information is confidential
-
limited in scope to protect only necessary interests
-
clear about duration, including post-termination obligations
-
supported by a confidentiality policy and training
Confidentiality clauses that are too vague or overly broad may be difficult to enforce.
What Are Restrictive Covenants?
Restrictive covenants are contractual terms that restrict an employee’s conduct after their employment ends. Common forms include:
-
Non-compete clauses (restrict working for a competitor)
-
Non-solicitation clauses (restrict soliciting clients or staff)
-
Non-dealing clauses (restrict dealing with former clients)
-
Non-poaching clauses (restrict hiring former colleagues)
Restrictive covenants are ancillary to the employment contract and generally only enforceable if reasonable and necessary to protect legitimate business interests.
What Are Legitimate Business Interests?
UK courts will only enforce restrictive covenants where they protect a legitimate business interest, such as:
-
protection of trade secrets and confidential information
-
protection of goodwill and client relationships
-
protection of stable workforce (e.g., senior team poaching)
-
protection of specialised training investment
Protecting mere competition itself is not sufficient, there must be a genuine risk to confidential information or business stability.
What Makes a Restrictive Covenant Enforceable?
Restrictive covenants will be enforceable only if they are:
-
reasonable in scope (activity restricted)
-
reasonable in geography
-
reasonable in time (duration after termination)
-
no wider than necessary to protect legitimate interests
If too broad, courts may:
-
refuse to enforce the covenant, or
-
modify (blue-pencil) the term where permitted
Employers should avoid drafting covenants that simply seek maximum restriction without justification.
Common Types of Restrictive Covenant
Non-Compete Clauses
Prohibit an employee from working for competitors or in competing businesses for a limited period and area.
Best practice for enforceability:
-
limit to critical roles (e.g., senior management, sales)
-
limit to a reasonable timeframe (commonly 3–12 months)
-
limit to work that the employee has been materially involved in
-
restrict to defined geography or markets
Non-Solicitation of Clients
Prevents a former employee from contacting clients or customers with whom they had genuine connections during employment.
This type of covenant is generally more enforceable than broad non-compete clauses, as it targets identifiable clientele.
Non-Solicitation of Staff
Prohibits a departing employee from poaching colleagues. Courts are more supportive of these where there is evidence of a real risk to the business.
Non-Dealing and Non-Approach Clauses
Non-dealing clauses restrict transacting with specific clients, even if not actively soliciting them, and can protect goodwill where appropriate.
When Should Restrictive Covenants Be Used?
You should use restrictive covenants when employees:
-
handle sensitive client relationships
-
have access to confidential data or trade secrets
-
are in senior, strategic or commercially critical roles
-
are part of small teams where goodwill is concentrated
Avoid using them indiscriminately for lower-risk roles, overuse can signal a fishing expedition and undermine enforceability.
How We Can Help
Our team can assist you with:
-
drafting tailored confidentiality clauses and restrictive covenants
-
reviewing existing contracts for enforceability and compliance
-
advising on enforcement strategy and litigation risk
-
training HR and management on best practice
-
preparing letters prior to litigation and injunction applications
Effective protective clauses safeguard your business and support commercial growth.
Making the cost of expert employment law advice predictable, affordable and essential to your business.
ENHANCE is our unique, industry-leading employment law service just for employers. Employment law is fast-paced and constantly changing. We have created ENHANCE to protect your business from the risks of employee disputes and litigation, and to help you successfully navigate your business through the minefield of employment law.
CONTACT US
For enquiries, legal advice, or case evaluations, feel free to reach out to us anytime. Fill out the form below and a member of the team will be in touch as soon as possible.