Restrictive Covenants: Are They Enforceable, and Can You Negotiate Them?

Written by: Owen John, Employment Law Partner, Darwin Gray | Last updated: 24/10/2026 | Reviewed by: Owen John

Key takeaways

• Restrictive covenants are clauses that limit what you can do after you leave, who you work for, which clients you approach, which colleagues you poach.
• They’re only enforceable if they go no further than reasonably necessary to protect a legitimate business interest.
• Covenants that are too wide, too long, or too vague are often unenforceable, but you can’t just assume that and ignore them.
• Settlement agreements frequently restate or even add restrictions, so it’s worth checking them before you sign.
• They can usually be negotiated, narrowed, shortened, or removed, especially when you’ve got leverage.

What are restrictive covenants?

Restrictive covenants are terms in your employment contract (and often in your settlement agreement) that limit what you can do once you’ve left. The common types are:

• Non-compete: stops you working for a competitor, or setting up in competition, for a period after you leave.
• Non-solicitation: stops you approaching your former employer’s clients or customers.
• Non-dealing: stops you doing business with those clients even if they approach you.
• Non-poaching: stops you recruiting your former colleagues.

The purpose, from the employer’s side, is to protect things like client relationships, confidential information, and a stable workforce after a key person leaves. The effect, from your side, is that they can limit where you work next and what you do, which is why they matter so much when you’re leaving.

If you’re looking at a settlement agreement, the restrictive covenants in it deserve real attention, they can shape your next year or two.

Are restrictive covenants enforceable?

Here’s the key principle: restrictive covenants are only enforceable if they go no further than reasonably necessary to protect a legitimate business interest. The starting point in law is actually that they’re void as a “restraint of trade”, and the employer has to justify them.

A court or tribunal will look at things like:

• Scope: does it cover only what the employer genuinely needs to protect, or does it sweep far too wide?
• Duration: three months might be reasonable; two years rarely is, for most roles.
• Geography: a restriction covering the whole UK (or the world) for a local role is usually too broad.
• Your seniority and access: what’s reasonable for a director with deep client relationships isn’t reasonable for a junior employee.

So a covenant that’s too wide, too long, or not tailored to a real business interest may well be unenforceable. But, and this is important, you can’t simply decide that for yourself and breach it. If you get it wrong, you could face an injunction and a damages claim. Whether a covenant actually bites is a judgement call, and it’s one worth getting right.

Restrictive covenants in settlement agreements

Settlement agreements often do one of two things with covenants, and both are worth watching for.

Sometimes they simply restate the covenants from your original contract, as a reminder that they still apply. Sometimes, though, they introduce new or wider restrictions, or re-confirm old ones in a way that’s designed to shore them up (because a freshly agreed, properly compensated covenant is easier for an employer to enforce than a shaky one buried in an old contract).

That second scenario is the one to watch. If you’re being asked to sign up to fresh restrictions as part of your exit, you’re giving something up, and that has a value you can negotiate around. Don’t treat the covenants as boilerplate just because they’re near the back of the document.

Can you negotiate them?

Yes, and this is one of the most valuable things we do on a settlement. Because the covenants affect your ability to earn a living, there’s often real room to push back. Depending on your leverage, we can often get restrictions:

• Narrowed, so they only cover genuine competitors or specific clients, not your whole sector.
• Shortened, so you’re free sooner.
• Removed, where they’re unreasonable or unnecessary.
• Offset against garden leave, so time already spent out counts towards the restriction.

Your leverage is usually strongest where the covenants look unenforceable anyway, or where you have potential claims the employer would rather settle. Getting unreasonable restrictions removed or limited in the agreement itself gives you much clearer certainty than hoping they’d be unenforceable if ever tested. This matters especially for directors and senior executives, whose covenants tend to be the widest, and for anyone focused on getting a job after a settlement agreement.

What happens if you breach one?

If you breach an enforceable covenant, your former employer can seek an injunction to stop you, and potentially claim damages for losses they’ve suffered. Injunction applications can be fast and expensive. That’s why guessing whether a covenant is enforceable is risky, if you’re wrong, the consequences land quickly. Far better to get the position assessed and, where possible, sorted out in the settlement agreement itself, so you know exactly where you stand before you start your next role.

Frequently asked questions

Are restrictive covenants legally enforceable?

They can be, but only if they go no further than reasonably necessary to protect a legitimate business interest, like client relationships or confidential information. The legal starting point is that they’re void as a restraint of trade, and the employer has to justify them. Covenants that are too wide, too long, or too geographically broad are often unenforceable. But you can’t safely assume that and breach one, because if you’re wrong you could face an injunction. It’s worth getting the position assessed.

Can I negotiate restrictive covenants in my settlement agreement?

Yes, and it’s often well worth doing. Because covenants affect your ability to earn, there’s frequently room to negotiate them narrower, shorter, or out altogether, especially if they look unenforceable or you have potential claims. Getting restrictions limited in the settlement agreement itself gives you far more certainty than relying on them being unenforceable later. This is one of the most valuable parts of taking advice before you sign.

How long do restrictive covenants last?

It varies, but the restriction only lasts as long as is reasonable for the role, and reasonableness is judged tightly. For many employees, three to six months is common for non-compete clauses; twelve months or more tends to appear only for senior people with significant client relationships. A covenant that’s longer than reasonably necessary risks being unenforceable. If yours feels long for your role, that’s often a sign it can be challenged or negotiated down.

What happens if I breach a restrictive covenant?

If the covenant is enforceable, your former employer can apply for an injunction to stop you, and may claim damages for any losses. Injunction applications can move quickly and cost a lot. That’s why it’s risky to assume a covenant is unenforceable and simply ignore it. The safer route is to get the covenant assessed, and ideally dealt with in your settlement agreement, so you know where you stand before you take your next role.

Talk to us about your settlement agreement

If your settlement agreement contains restrictive covenants, we’ll tell you whether they’re enforceable, what they mean for your next move, and where there’s room to negotiate. We’re Darwin Gray, one of Wales’ leading employment law firms. You’ll deal directly with your solicitor, and as the only firm in Wales offering full Welsh language employment advice at every level, we can help in Welsh or English.

Get a free, no obligation chat with our employment team. Call 02920 829 100 or use our contact form.

Related information

Settlement agreements for employees

Garden leave

Negotiating a settlement agreement

Getting a job after a settlement agreement

Disclaimer: This guide is general information, not legal advice, and employment law changes. For advice on your situation, please speak to a qualified employment solicitor.

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