Most readers of this blog will be familiar with the concept of “restraint of trade” and the public policy reasons why the law regulates it so closely, namely that individuals should be free to use their skills and earn a living without unnecessary restrictions.
The doctrine applies around the world to a greater or a lesser degree – with different rules applying depending on both the jurisdiction and the legal situation. In the UK employment context, the general starting point is that any contractual term which restricts an employee’s freedom to carry out their trade will be void, unless (a) it protects the employer’s legitimate business interests; and (b) it goes no further than reasonably necessary to do so. The reasonableness of any such clause has to be viewed at the date of signing and without the glorious benefit of hindsight. It is for this reason that so much ink is spilled on the proper drafting of post-termination restrictive covenants (e.g. non-competition, non-solicitation of clients and customers, etc.) which are bespoke both to the particular role an individual carries out and the consequent risk to the business should that individual leave. This reflects the basic principle that a court will not enforce these, unless the employer can show (as a minimum) that that they satisfy both (a) and (b) above.
