{"id":1455,"date":"2022-01-10T02:56:08","date_gmt":"2022-01-10T02:56:08","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=1455"},"modified":"2024-05-29T06:13:17","modified_gmt":"2024-05-29T05:13:17","slug":"how-does-a-non-compete-clause-work-in-england-and-wales","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/","title":{"rendered":"How Does a Non-Compete Clause Work in the UK?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">As a business owner, you value the products and services you are delivering to the market, particularly if they are unique to your business. The last thing you want is for an employee to leave and set up a competing operation. For this reason, many employers include a non-complete clause in <a href=\"https:\/\/legalvision.co.uk\/employment\/importance-employment-contracts\/\">employee contracts<\/a>. A <a href=\"https:\/\/legalvision.co.uk\/franchising\/non-compete-franchise-agreement\/\">non-compete clause stops your employee<\/a> from carrying out a particular action for a specified time after their employment contract has ended. For example, an employer may decide to include clauses to prevent:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">solicitation;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">poaching;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">dealing; or\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">directly competing.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">It is essential that you are aware of the types of <a href=\"https:\/\/legalvision.co.uk\/employment\/what-is-a-non-compete-clause\/\">covenants or clauses<\/a> you can include in an employment contract to help protect your business. <\/span><span style=\"font-weight: 400;\">This article will explain how a non-compete clause works. It will explain what it is, the reason for it and any rules surrounding it. The article also explains potential proposals for changes in the law in the UK regarding non-compete clauses.\u00a0<\/span><\/p>\n<h2>What is a Non-Compete Clause?<\/h2>\n<p><span style=\"font-weight: 400;\">A <a href=\"https:\/\/legalvision.co.uk\/employment\/restraint-of-trade-clause\/\">non-compete clause<\/a> (also known as a restrictive covenant) in an employment contract that restricts an employee from carrying out a job in competition with yours once they leave your business. It also restricts them from poaching employees or clients from the business. This can include working for a competitor or working self-employed, for example, starting a business very similar to the one the employee had worked in.\u00a0<\/span><\/p>\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400;\">The restriction will remain in place after the employment contract has ended, for the time specified in the employment contract.<\/span><\/p>\n<\/div>\n<p><span style=\"font-weight: 400;\">You can also place a non-compete clause in a <a href=\"https:\/\/legalvision.co.uk\/employment\/settlement-agreements\/\">settlement agreement<\/a>. A settlement agreement is a legal contract between you and your employee. It is often in place as the relationship ends and can contain a promise such as an amount of money for your employee or to treat them fairly in the future.\u00a0<\/span><\/p>\n<h2>Why Use a Non-Compete Clause?<\/h2>\n<p><span style=\"font-weight: 400;\">In addition to the obvious use of a non-compete clause as a way to protect a business from direct competition, you can also use these clauses as a way to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/legalvision.co.uk\/intellectual-property\/trade-secret\/\">protect confidential information<\/a> such as trade secrets and client lists;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">protect the stability of a business\u2019 workers and clients; and<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">protect third party interests.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">As an employer, you should be aware that your employee is not obliged to agree to have a non-compete clause in their contract and may want to negotiate. However, if it is essential to your business to have a non-compete clause in the employment contract, you could insist or ultimately withdraw the offer of employment.<\/span><\/p>\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex 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       } else {            triggerPostRender();        }    } );} );\n<\/script>\n<\/div>\n<\/div>\n<div id=\"content-next\"><!-- scroll anchor --><\/div>\n<h2><span style=\"font-weight: 400;\">What Information Should a Non-Compete Clause Contain?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A non-compete clause should contain the:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">date when the clause comes into effect;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">duration which the clause covers;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">geographical area the clause relates to; and<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">compensation relevant to the clause.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">It should also be titled as a \u2018restrictive covenant\u2019 or \u2018post-termination restriction\u2019 so it is clear to the employee exactly what it is.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Can I Enforce a Non-Compete Clause?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">You may not be able to enforce your non-compete clause if it contains unreasonable terms. For example, if the length of time it is in place for is excessive. <\/span><\/p>\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400;\">A court may also not enforce a non-compete clause if it is considered too broad or unnecessary for the business\u2019 interests.<\/span><\/p>\n<\/div>\n<p><span style=\"font-weight: 400;\">Where a non-compete clause is enforceable, and your employee breaches it after they have left their employment with you, the ordinary course of action to take would be to:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">request that they refrain from the activities they are in breach of, which could include you writing to their new employer to make them aware of the clause;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">write a letter to the former employee to tell them you intend to seek a restraining order; or<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">apply to the court to prevent the employee from continuing to engage in actions that breach the non-compete clause. However, you must be sure that you have evidence that their actions could cause significant damage to your business. Where successful, you may recover your legal costs from the former employee.<\/span><\/li>\n<\/ol>\n<h2><span style=\"font-weight: 400;\">What is the Current Position on Non-Compete Clauses?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Whilst you can still use non-compete clauses in employment contracts, the government is considering making changes to the law regarding these. These changes would be in response to the effect of the COVID-19 pandemic on the economy. The Government recognises that non-compete clauses can act as an obstacle to workers finding employment or starting their own business. Indeed, it may compete with the job they previously worked in, thus preventing innovation and competition.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The UK government, therefore, carried out a <a href=\"https:\/\/www.gov.uk\/government\/consultations\/measures-to-reform-post-termination-non-compete-clauses-in-contracts-of-employment\">consultation on this area of employment law<\/a> between 4 December 2020 and 26 February 2021 to find out the views of the general public on this. <\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Key Takeaways<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Non-compete clauses are useful post-termination restrictive clauses that you can use as an employer, which will protect your business by preventing direct competition. However, you must understand how to use a non-compete clause. For a non-compete clause to be enforceable, it must be only as wide as is necessary to protect your business. Additionally, you should ensure that you include specific information in any non-compete clauses in your contracts, including the dates and geographical locations for which you want to limit your former employee&#8217;s business activities.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This article has explained:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">what a non-compete clause is;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">why you might want to use this type of clause;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">what a non-compete clause should contain;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">how to ensure this type of clause is enforceable; and<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">proposals which may change these.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If you need help understanding non-compete clauses or keeping up to date with any imminent changes in the law in this area, our <a href=\"https:\/\/legalvision.co.uk\/employment-lawyers-lp\/\">experienced employment lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or visit our<\/span>\u00a0<a href=\"https:\/\/legalvision.co.uk\/membership\"><span style=\"font-weight: 400;\">membership page<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Frequently Asked Questions<\/span><\/h2>\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1641782596736\"><strong class=\"schema-faq-question\">What were the UK government\u2019s consultations on non-compete clauses about?<\/strong> <p class=\"schema-faq-answer\">In 2021 the UK government consulted the public about proposed changes to the law on non-compete clauses. They asked for views on the possibility of putting rules in place with non-compete clauses, including requiring them to be accompanied by compensation. The UK government is currently reviewing the results of their consultation.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1641782615577\"><strong class=\"schema-faq-question\">Where might an employer include a non-compete clause?<\/strong> <p class=\"schema-faq-answer\">Non-compete clauses are usually found in an employee\u2019s employment contract or an employee\u2019s settlement agreement.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/1455\" \/>            <input value=\"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"How Does a Non-Compete Clause Work in the UK?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>As a business owner, you value the products and services you are delivering to the market, particularly if they are unique to your business. The last thing you want is for an employee to leave and set up a competing operation. For this reason, many employers include a non-complete clause in employee contracts. A non-compete<a href=\"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/\">Continue reading <span class=\"sr-only\">&#8220;How Does a Non-Compete Clause Work in the UK?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13326,"featured_media":680,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1358,1966,2498,2235,1206,999","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[35],"tags":[20,21,219,298],"class_list":["post-1455","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment","tag-small-business","tag-medium-business","tag-employment-law","tag-non-compete-clause"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Does a Non-Compete Clause Work? | LegalVision UK<\/title>\n<meta name=\"description\" content=\"A non-compete clause stops your employee from doing particular actions for a specified time after their contract has ended. 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We explain.","breadcrumb":{"@id":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/#breadcrumb"},"mainEntity":[{"@id":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/#faq-question-1641782596736"},{"@id":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/#faq-question-1641782615577"}],"inLanguage":"en-GB","potentialAction":[{"@type":"ReadAction","target":["https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/"]}]},{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/#primaryimage","url":"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2021\/11\/30230750\/brand-design-00237.jpg","contentUrl":"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2021\/11\/30230750\/brand-design-00237.jpg","width":1600,"height":1067,"caption":"How Does a Non-Compete Clause Work?"},{"@type":"BreadcrumbList","@id":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/legalvision.co.uk\/"},{"@type":"ListItem","position":2,"name":"Employment Articles","item":"https:\/\/legalvision.co.uk\/category\/employment\/"},{"@type":"ListItem","position":3,"name":"How Does a Non-Compete Clause Work in the UK?"}]},{"@type":"WebSite","@id":"https:\/\/legalvision.co.uk\/#website","url":"https:\/\/legalvision.co.uk\/","name":"LegalVision UK","description":"LegalVision is a commercial law firm in the UK with a commitment to innovation","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/legalvision.co.uk\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-GB"},{"@type":"Person","@id":"https:\/\/legalvision.co.uk\/#\/schema\/person\/46fdb392af527f38f90649480343e732","name":"Clare Farmer","image":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/legalvision.co.uk\/#\/schema\/person\/image\/","url":"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2022\/03\/12052028\/LegalVision_square_logo-150x150.png","contentUrl":"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2022\/03\/12052028\/LegalVision_square_logo-150x150.png","caption":"Clare Farmer"},"description":"Clare has a postgraduate diploma in law and writes on a range of subjects and in a variety of genres. Prior to her freelance writing work, Clare worked for UK central government in policy and communication roles. She has also run her own businesses where she founded a magazine and was editor-in-chief. She is currently studying part-time towards a PhD predominantly in international public law. Qualifications: PhD, Human Rights Law (underway), University of Bedfordshire, Post graduate diploma, Law, Middlesex University.","sameAs":["https:\/\/www.linkedin.com\/in\/ms-clare-susannah-f-4a243545\/"],"url":"https:\/\/legalvision.co.uk\/author\/clarefarmer\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/#faq-question-1641782596736","name":"What were the UK government\u2019s consultations on non-compete clauses about?","acceptedAnswer":{"@type":"Answer","text":"In 2021 the UK government consulted the public about proposed changes to the law on non-compete clauses. They asked for views on the possibility of putting rules in place with non-compete clauses, including requiring them to be accompanied by compensation. The UK government is currently reviewing the results of their consultation.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/employment\/how-does-a-non-compete-clause-work-in-england-and-wales\/#faq-question-1641782615577","name":"Where might an employer include a non-compete clause?","acceptedAnswer":{"@type":"Answer","text":"Non-compete clauses are usually found in an employee\u2019s employment contract or an employee\u2019s settlement agreement.","inLanguage":"en-GB"},"inLanguage":"en-GB"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/1455","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/users\/13326"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/comments?post=1455"}],"version-history":[{"count":13,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/1455\/revisions"}],"predecessor-version":[{"id":188502,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/1455\/revisions\/188502"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/media\/680"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/media?parent=1455"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/categories?post=1455"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/tags?post=1455"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}