We are drafting employment contracts for our first few hires and I wanted to actually understand how non-compete clauses work in the UK before assuming they offer the same level of protection people often describe. Here is what I have pieced together so far, would appreciate anyone correcting me or adding context.
Non-compete clauses, along with related restrictions like non-solicitation and non-poaching clauses, fall under what is called restrictive covenants in UK employment law, and courts generally start from the position that these restrict a person's ability to earn a living, so they are only enforceable if they go no further than reasonably necessary to protect a genuine business interest. A clause that is too broad in scope, duration, or geographic reach tends to be struck down entirely rather than narrowed by a court.
Seniority and actual access to sensitive information both seem to matter a lot when courts assess reasonableness. Duration also seems to be scrutinised closely, with courts generally viewing anything beyond around six to twelve months with real suspicion unless there is a strong justification for a longer period.
There also seems to be a difference between a non-compete, which restricts someone from working for a competitor entirely, and narrower restrictions like non-solicitation, which only prevents someone from actively approaching former clients or colleagues.
What I am still trying to understand is how much a startup should realistically rely on non-compete clauses given how difficult and expensive they can be to actually enforce through the courts, versus focusing more on things like confidentiality agreements and IP assignment.
Has anyone here actually tried to enforce a non-compete clause, or had one enforced against them? Curious how it actually played out, and whether it held up the way you expected going in.
Found a fairly clear explanation of this on Entrepreneur Plus while I was reading around the topic, helped me understand the founder side of it a bit better.
Non-compete clauses, along with related restrictions like non-solicitation and non-poaching clauses, fall under what is called restrictive covenants in UK employment law, and courts generally start from the position that these restrict a person's ability to earn a living, so they are only enforceable if they go no further than reasonably necessary to protect a genuine business interest. A clause that is too broad in scope, duration, or geographic reach tends to be struck down entirely rather than narrowed by a court.
Seniority and actual access to sensitive information both seem to matter a lot when courts assess reasonableness. Duration also seems to be scrutinised closely, with courts generally viewing anything beyond around six to twelve months with real suspicion unless there is a strong justification for a longer period.
There also seems to be a difference between a non-compete, which restricts someone from working for a competitor entirely, and narrower restrictions like non-solicitation, which only prevents someone from actively approaching former clients or colleagues.
What I am still trying to understand is how much a startup should realistically rely on non-compete clauses given how difficult and expensive they can be to actually enforce through the courts, versus focusing more on things like confidentiality agreements and IP assignment.
Has anyone here actually tried to enforce a non-compete clause, or had one enforced against them? Curious how it actually played out, and whether it held up the way you expected going in.
Found a fairly clear explanation of this on Entrepreneur Plus while I was reading around the topic, helped me understand the founder side of it a bit better.