Restrictive covenants in a settlement agreement, explained

If your settlement agreement mentions restrictions on your next job, it's worth understanding exactly what they stop you doing. And whether they'd actually hold up.

What are the common types of restrictive covenant?

Non-compete. Stops you working for a competitor, usually for a defined period
Non-solicitation. Stops you approaching your former employer's clients or staff
Non-dealing. Stops you doing business with named clients even if they approach you first
Confidentiality. Stops you sharing commercially sensitive information you learned in the role

These may already exist in your original employment contract, or new ones can be introduced or extended as part of the settlement agreement itself.

Are restrictive covenants always enforceable?

Not automatically. UK courts only enforce a restrictive covenant if it goes no further than reasonably necessary to protect a legitimate business interest. An overly broad geographic area, an excessively long time period, or a vague, sweeping non-compete can be challenged as unenforceable. This is a genuinely technical area where a solicitor's read matters: the clause might look intimidating on paper but carry little real legal weight, or it might be entirely valid and worth taking seriously.

What should you check in a settlement agreement restrictive covenant?

How long does the restriction last, and does that length seem proportionate to your role?
Is the geographic or client scope clearly defined, or vague and sweeping?
Is it a brand-new clause being introduced now, or one already in your existing contract?
Would it realistically stop you taking the next job you actually want?

Can restrictive covenants be negotiated?

Often, yes. If a covenant would really block your next move, it's reasonable to ask for it to be narrowed, shortened, or removed as part of the wider negotiation. Particularly if your solicitor thinks it's overly broad in the first place.

Worried a clause in your agreement might limit your next job? Get free advice and help and an independent solicitor can flag anything that needs a closer look.

Frequently asked questions

Can my old employer really stop me joining a competitor?

Only if the restriction is reasonable and no broader than necessary to protect a genuine business interest. Overly broad non-compete clauses can be successfully challenged, but a well-drafted, proportionate one can be enforceable.

Do restrictive covenants expire?

Yes. They’re only valid for the period stated in the clause, and UK courts won’t generally enforce indefinite restrictions.

Should I just accept the covenant if I want the settlement to go through?

Not necessarily. Raising a concern about an overly broad clause is a normal part of negotiation and doesn’t usually put the wider settlement at risk. Get your solicitor’s view before assuming you have to accept it as written.

Wherever you are in the process, get free settlement agreement help is here to help.