Restrictive Covenants

The Department for Business, Energy and Industrial Strategy has issued a consultation paper on measures to reform post-termination restrictive covenants.

It is considering two things.

First, altering the law so that post-termination restrictive covenants are only enforceable if the employer continues paying remuneration during the restricted period.  That would mean paying an amount to the employee, maybe even the equivalent to the salary that they would have received, to compensate them for not being able to work for a competitor, or approach the employer's clients, for a period of, typically, 6 months.

Second, banning post-termination restrictive covenants completely - this seems a bit too extreme, but it would certainly stop the arguments about restrictive covenants being a restraint of trade.  If this happened, employers would have to ensure that its confidentiality provisions in employment contracts are really tightly drafted. 

The consultation closes on 26 February 2021.

Source: Daniel Barnett

If you need further advice on restrictive covenants, please contact the Starford team on 01342 347063 or email us via hello@starfordlegalhr.com