Restrictive Covenants – Reasonableness

The courts will only uphold a restrictive covenant if it is a reasonable means of protecting a legitimate interest. It is important therefore that the restrictive covenant is drafted carefully and tailored to the individual employee (or class of employee) in question. It is also advisable to err on the side of caution when considering the scope of a draft restriction. The following are examples of what courts often look at:

  1. The length of time of the restriction;
  1. the geographical remit of the restriction;
  1. whether there is a personal next service between the employee and the business connection (i.e. was this a client the employee had a relationship with);
  1. whether a less draconian clause would have been sufficient (e.g. would a confidentiality clause protect the company so that a non-compete clause was not necessary);
  1. are the restrictions proportionate to the period of notice;
  1. whether the clauses relate to competitive activity (e.g. is the employee only prevented from working with that client in a competitive field and not just across the board); and
  1. whether a properly drafted garden leave clause would have been sufficient to protect the company’s legitimate business interests.