UK Restrictive Covenants (2026/27): Non-Compete, Non-Solicit, Non-Deal Enforceability
UK restrictive covenants 2026/27: non-compete vs non-solicit vs non-deal vs confidentiality, the "legitimate business interest" + "reasonably necessary" test (TFS Derivatives v Morgan [2004]), 12-month duration norm, garden leave interaction, May 2023 government consultation on 3-month statutory cap, injunctions + damages, severance + blue pencilling.
The covenant landscape
Non-compete
Bans working for / setting up a competing business. Hardest to enforce. Typical duration 3-12 months; geography varies.
Non-solicit (customers)
Bans approaching former customers to win business. Generally easier to enforce than non-compete. Typical 6-12 months.
Non-deal (customers)
Bans transacting with former customers even if they approach you. Stronger than non-solicit; harder to enforce because more restrictive.
Non-poach (employees)
Bans recruiting former colleagues. Easier to enforce because the legitimate interest (workforce stability) is clear.
Confidentiality
Bans use / disclosure of trade secrets + confidential information. Usually open-ended (until information enters public domain). Almost always enforceable.
Garden leave
Keeps employee on payroll but bans them from working during notice. Different mechanism from post-termination covenants; often used together.
The reasonableness test (TFS Derivatives v Morgan)
- Legitimate business interest - confidential information, customer connections, workforce stability, goodwill. Generic "no competition" doesn\'t qualify.
- Reasonably necessary - in scope, duration, and geography. The covenant must go no wider than needed to protect the interest.
- Public interest - the covenant must not unreasonably restrict the employee\'s ability to work or restrict competition in the wider market.
- Time of assessment - reasonableness judged at the time the contract was signed, NOT at the time of enforcement.
Each clause is examined independently. A package of covenants where one is too wide can survive in part if the unreasonable parts can be blue-pencilled out without rewriting. Aggressive drafting risks total failure.
Negotiating + exiting covenants
- Before signing - request narrowing of geography ("UK financial services" → "UK retail banking competitors of [employer]"), shortening of duration (12 → 6 months), naming of specific carve-outs (e.g. "non-customer-facing roles permitted").
- During employment - request written clarification of any specific activity you\'re uncertain about; HR confirmation can prevent later disputes.
- At exit - settlement agreement is the cleanest. Negotiate: carve-out for the specific next employer, duration reduction in exchange for other concessions, geographic narrowing.
- After leaving - obtain Counsel\'s opinion on enforceability. Even where covenant is risky, written opinion gives cover to new employer + reduces injunction risk.
- Garden leave swap - the employer may agree to garden leave during notice in exchange for shorter / waived post-termination covenants. Garden leave can\'t be combined with full-length post-termination covenants (double-protection) - courts will read down.
Related guides
- UK Employment Contract Red Flags 2026/27 - identifying problematic covenants at the offer stage.
- UK Notice Period Rules 2026/27 - garden leave interaction with covenants.
- UK Salary Negotiation 2026/27 - non-cash levers including covenant narrowing.
- UK Constructive Dismissal 2026/27 - covenant enforcement post-exit.
Frequently asked questions
Are restrictive covenants enforceable in 2026?
Yes, subject to the "reasonableness" test. The starting point in English law is that covenants restraining trade are unenforceable - but they become enforceable if (a) they protect a legitimate business interest (confidential info, customer connections, workforce stability, goodwill), (b) they go no wider than necessary to protect that interest in scope, duration, and geography, AND (c) they are not contrary to public interest. TFS Derivatives v Morgan [2004] is the leading test. Each clause is examined independently. The standard varies by seniority - more readily enforced against senior + client-facing roles.
What's a "legitimate business interest"?
Three main categories the courts recognise: (a) Confidential information + trade secrets - product roadmaps, customer pricing, supplier terms, proprietary processes. (b) Customer connections - personal goodwill the employee built with specific customers, especially in client-facing roles. (c) Workforce stability - protecting against systematic poaching of key colleagues. The employer must show the SPECIFIC interest exists + the covenant protects it. Generic "we don't want competition" doesn't qualify. The legitimate interest test is applied for each covenant separately.
How long can a non-compete last?
3-12 months is the typical range, with 6 months as a common compromise for mid-level roles. Beyond 12 months requires very strong justification (e.g. unique trade secrets with multi-year market value). 24-month covenants for senior executives sometimes upheld (e.g. board-level roles in pharma + financial services). The May 2023 government consultation proposed a statutory 3-month cap on non-competes; consulted but not yet legislated as of mid-2026. Garden leave during notice can reduce or eliminate the period the post-termination covenant runs - courts won't double-protect.
How wide can the geographic scope be?
Must match the legitimate business interest. A local solicitor's firm might justify "within 10 miles" of the office; a global investment bank can justify "anywhere the employee dealt with clients during the last 12 months". Common drafting: territorial restrictions tied to where the employee worked + the employer's customer base, not blanket geography. Worldwide restrictions are sometimes upheld for senior tech / financial roles but require evidence of genuine global business. Vague "UK financial services" type restrictions are easier to challenge than narrow "competitors of [employer] in [specific sub-sector]" formulations.
What happens if a covenant is too wide?
The court can: (a) Strike it out entirely - the whole covenant unenforceable. (b) "Blue pencil" - delete specific words to leave a narrower enforceable version, but only by simple deletion (not rewriting). E.g. "12 months" cannot be blue-pencilled to "6 months"; "10 miles + 20 miles" can be blue-pencilled to "10 miles". (c) Sever the clause from the rest of the contract while leaving other terms intact. The court will NOT rewrite an unreasonable covenant to make it reasonable - so over-drafting risks total failure. Conservative drafting that's clearly enforceable beats aggressive drafting that's vulnerable.
What can the employer do if I breach?
Two main remedies: (a) Interim injunction - urgent court order requiring you to stop the breach (e.g. stop working for the new employer, stop approaching customers). Common in financial services + sales-heavy industries. Decided within days/weeks; you face legal costs even if you win the substantive case. (b) Damages - financial loss the breach caused. Hard to quantify; often resolved as a "springboard" award (lost revenue during the period you should not have been competing). The injunction is the bigger threat - it can stop a new job before it starts. Take advice before joining a competitor if covenants exist.
Will the proposed 3-month statutory cap pass?
Uncertain as of mid-2026. The May 2023 BEIS consultation closed; the previous government supported the 3-month cap but didn't legislate before the July 2024 election. The Employment Rights Bill 2024 (Labour) doesn't explicitly include the 3-month cap but does signal review of restrictive covenants. Practitioner consensus: some restriction on non-competes is likely within the parliament, but the exact form + commencement is unclear. Until legislated, the existing reasonableness framework continues - covenants written today should remain enforceable post-reform if drafted conservatively.
How do I get out of unreasonable covenants?
(1) Before signing: negotiate. Restrictive covenants are very negotiable for senior + scarce-skill roles; junior roles less so. (2) During employment: limited; ask HR for written confirmation that specific activities are permitted (e.g. attending industry events, accepting a board role). (3) At exit: settlement agreement is the cleanest. Negotiate covenant carve-outs explicitly - geographic narrowing, duration reduction, named carve-out for specific competitors, exclusion of specific roles. (4) After leaving: legal advice on whether the covenant is enforceable in your specific circumstances. Counsel's opinion on enforceability can give cover to new employer + reduce injunction risk.