A restraint clause (also called a "non-compete" or "restrictive covenant") stops you from working for competitors or starting a competing business for a set period after you leave your job. For example, a software engineer might agree not to work for any competing software company for 12 months after leaving. The legal principle is that restraint clauses are only enforceable if they're "reasonable"—meaning they protect the employer's legitimate business interests (like trade secrets or customer relationships) without being so broad that they unfairly prevent you from earning a living. UK and US courts regularly strike down restraint clauses that are too long, too geographically wide, or too vague. A 2-year worldwide restraint on a junior employee would likely be unenforceable; a 6-month restraint on a senior executive with access to secrets might be reasonable.
If you're an employee, negotiate the restraint period down to the shortest possible time—6 months is reasonable, 12 months is pushing it, and anything over 18 months is hard to enforce. Also narrow the geographic scope (e.g., "within the UK" instead of "worldwide") and the definition of what you can't do (e.g., "competing products in the financial services sector" instead of "any business"). If the restraint is very broad, ask for "garden leave" or extra severance pay as compensation for the restriction. If you're an employer, keep restraints to 12 months or less and be specific about what counts as a competitor—vague restraints won't hold up in court.
Frequently Asked Questions
What does this clause mean in simple terms?
A restraint clause (also called a "non-compete" or "restrictive covenant") stops you from working for competitors or starting a competing business for a set period after you leave your job.
Why should I care about this clause?
For example, a software engineer might agree not to work for any competing software company for 12 months after leaving.
What are my options?
The legal principle is that restraint clauses are only enforceable if they're "reasonable"—meaning they protect the employer's legitimate business interests (like trade secrets or customer relationships) without being so broad that they unfairly prevent you from earning a living.
How does this affect small businesses?
UK and US courts regularly strike down restraint clauses that are too long, too geographically wide, or too vague.