A restrictive covenant is a clause or clauses; generally found in a contract of employment, but also commonly used in other circumstances such as the sale of property.
The purpose of a restrictive covenant in an employment situation is to safeguard the employer’s interests. These can vary enormously, but commonly include such things as:
- Non-competition covenant – This seeks to ensure that an employee leaving an organisation cannot set up in direct competition with his or her previous employers, or take employment with a competitor with a view to using information gained from that previous employer.
- Non-solicitation covenant – This is designed to prevent a former employee approaching, recruiting or seeking to recruit suppliers, customers or clients of his or her former employer.
- Non-dealing covenants – which seek to prevent former employees from dealing with a client, customer or supplier of the former employer, even when the customer or supplier makes the initial approach.
- Non-poaching covenant – which seeks to prevent a former employee from approaching or recruiting members of staff of their former employer
As an employer, you may feel that it is important that you incorporate restrictive covenants into your contracts of employment in order to safeguard your business.
In order to be reasonably enforceable, a restrictive covenant has to be drawn up in such a way as to be specific in terms of such things as geographical location and duration. Commonly, the term for such a restriction will be 6-12 months, but if it is arguable that a longer period is justified, then this can be incorporated into the covenant. The geographical restriction will depend largely on the nature of the business in question, but again must be drafted to be reasonable if it has any chance of enforcement should such a thing be necessary.
Throughout the process of establishing whether a restrictive covenant is necessary or desirable it is advised that you seek proper legal advice. At Khan McKenzie Solicitors, both our Wolverhampton and Birmingham offices will be happy to help.
As an employee it is important that you are fully aware of any restrictive covenants that might exist within your contract of employment and what the implications of these might be in the event you should leave or be forced to leave your employment. If you are unsure, please call us at Khan McKenzie Solicitors and we can advise
In respect of property, a restrictive covenant may be clauses incorporated into the documents of sale of a property or land to prohibit certain activities such as
- Building more than a certain number of properties.
- Building a property or properties of a certain kind or purpose
- Keeping animals or certain kinds of animal on the premises
- Allowing hedges, trees or other natural features to grow beyond a certain height or across certain boundaries
If you are buying land or property it is important that you know whether any restrictive covenants exist for the property or land. Your solicitor should be able to inform you of any such covenants or restrictions that might apply, and can help you to deal with them should it transpire that such a covenant exists.
As a seller, you may have the right to impose restrictive covenants on the buyer in order to protect your interests and property.
At Khan McKenzie Solicitors we have extensive and valuable expertise in dealing with restrictive covenants in both employment and property situations, and can advise you regardless of what side of the argument you find yourself.
This is a very complex and difficult area of law, and poor advice or a poorly worded contract can prove very costly in terms of both money and reputation, so it is all the more important that you seek out proper legal help in either drafting, negotiating, disputing or attempting to uphold such a covenant.
Keeping in view the financial difficulties of clients, we have tailored very reasonable and affordable costs structure for our clients. If you would like to discuss any matter related to Restrictive Covenants, please contact us through phone +44(121)794 2000 or alternatively make an online enquiry and we will respond at the earliest opportunity. We are very flexible in arranging appointments and offer highly friendly and personlized service with very competitive costs.