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RESTRICTIVE COVENANT CLAUSES

These Restrictive Covenant Clauses can be inserted into any contract of employment either at the time of drafting or subsequently provided the contract of employment is then modified by a Deed of Variation - Employment Contract.

 

Restrictive Covenant Clauses restrict the activities that an employee can participate in both during and after the termination of employment. Restrictive Covenant Clauses in order to be enforceable must be reasonably necessary to protect a legitimate business interest. However, even if a restraint is reasonably necessary to protect a legitimate business interest, it will nonetheless be unenforceable if it is unreasonably wide. Thus the restrictive covenant must be reasonable in terms of subject-matter, geographical location and time. In other words, the Restrictive Covenant Clauses to be enforceable should be for a limited period only and should be used for the protection of the employer's business.

 

Employers must ensure that the Restrictive Covenant Clauses do not go any further than reasonably necessary in order to protect their legitimate business interests. If the Restrictive Covenant Clauses are too restrictive in terms of duration and/or geographical scope then they are likely to be considered unreasonable and the Courts are likely to declare these clauses unenforceable.

 

This Restrictive Covenant Clauses document contains the following clauses:

 

  • Non-Solicitation Clause - preventing an employee or former employee from soliciting business/customers away from the employer. This clause prevents an employee or former employee from actively contacting clients, customers, suppliers etc. with whom they have built up a working relationship;
  • Non-Compete Clause - preventing an employee from competing with the business of the employer. Generally, this restrictive covenant is used to prevent an employee from pursuing work in a similar profession or trade or starting a company in competition with its employer during the employee's employment and for a certain time after the employment is terminated; and
  •  Non-Poaching Clause - preventing an employee from enticing away staff/employees from the employer. This clause ensures that key personnel do not leave their employment after the departure of another key worker.


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