Key Takeaways
- Restrictive covenants after resignation or redundancy, especially non-compete clauses, are routinely included in settlement agreements and can restrict your future employment prospects.
- Non-compete clauses are often overused and excessively broad in settlement agreements, potentially making them unreasonable and unenforceable under UK employment law.
- You have the right to negotiate restrictive covenants to ensure the terms are fair, necessary, and don’t unfairly prevent you from working.
- Signing a settlement agreement without legal advice may expose you to unfair or unlawful post-employment restrictions.
- Our solicitors are SRA-regulated and provide free, employer-funded advice on restrictive covenants, including the fairness and enforceability of non-compete clauses, and your options to negotiate.
- Our solicitors specialise in negotiating better settlement terms, frequently reducing or removing non-compete clauses and maximising your settlement payment.
- Settlement Agreement Lawyers provide same-day, remote legal consultations nationwide. We are rated Excellent on Trustpilot by satisfied clients.
Restrictive Covenants after Resignation or Redundancy: Are Non-Compete Clauses Still Being Overused in Settlement Agreements?
Settlement agreements following resignation or redundancy regularly include restrictive covenants like non-compete clauses. While designed to protect a business’s interests, these clauses are often overreaching or unfair. Many employees don’t realise they can challenge or negotiate these terms—especially with our solicitors supporting you.
Independent legal advice is required before you sign a settlement agreement. The good news? Your employer usually pays for our solicitor’s advice, meaning this specialist service is typically free to you.
In this article, our solicitors cover everything you need to know about restrictive covenants after resignation or redundancy: whether non-compete clauses are overused in settlement agreements, when such terms are legally enforceable, and proven strategies for negotiation. We also explain the practical steps to protect your career and highlight any recent legal reforms affecting your rights.
What Are Restrictive Covenants in Settlement Agreements?
Restrictive covenants are clauses within settlement agreements that restrict what you can do after your employment ends. They can apply to departures following resignation or redundancy—but must be used fairly.
Common Types of Restrictive Covenants
- Non-compete clauses: Prevent you from joining or starting a competing business for a set time and location.
- Non-solicitation clauses: Restrict you from approaching your former employer’s clients or customers.
- Non-poaching clauses: Ban you from encouraging former colleagues to join you elsewhere.
- Non-dealing clauses: Stop you from working with certain clients, even if they approach you independently.
- Confidentiality clauses: Forbid sharing or using your ex-employer’s confidential information.
Are Non-Compete Clauses Overused in Settlement Agreements?
Non-compete clauses are increasingly added as a standard part of settlement agreements. In many cases, their scope far exceeds what would be considered reasonable for the role or the circumstances, especially after redundancy or in less senior positions.
Why Are Overbroad Non-Competes Problematic?
- They can unfairly block you from finding suitable work or re-entering your field.
- Clauses that are too long, wide, or restrictive are unlikely to be enforced under UK law, as employers must demonstrate the restriction protects a legitimate business interest and is no more restrictive than necessary.
How Do I Check If My Non-Compete Clause Is Reasonable?
A reasonable non-compete clause should:
- Be limited in time: Typically 3–6 months; 12 months is rare and only for the most senior or sensitive roles.
- Refer to relevant geography: It should only cover areas where your employer has genuine business operations.
- Be relevant to your role: Restrictions must relate to clients or business matters you were actually involved in.
If your clause is vague or extends beyond what you did in your role, it is probably excessive.
Why Independent Legal Advice (ILA) Is Mandatory
You cannot legally sign away your employment rights in a settlement agreement without independent legal advice (ILA). Under section 203 of the Employment Rights Act 1996, your settlement is not valid unless an independent regulated solicitor certifies it.
- Employer-funded: The employer pays for your ILA, so our legal support is provided at no cost to you.
- Full review: Our solicitor will go through every restrictive covenant, explaining enforceability, any risks, and next steps.
- Official certificate: Our solicitor issues your SRA-regulated ILA certificate to ensure your agreement is binding.
Book your free, employer-funded legal review with our solicitors today. Same-day appointments available.
Can I Negotiate or Remove Restrictive Covenants in a Settlement Agreement?
Yes, restrictive covenants—including non-compete clauses—are negotiable. You do not have to accept whatever terms are presented to you, and your solicitor’s advice is central to this process.
How Our Solicitors Help You Negotiate
- Compare contracts: Our solicitors review both your employment contract and draft settlement agreement for any increased or new restrictions.
- Challenge over-reach: If restrictive covenants are too broad, we press for removal or narrowing unless the employer can justify them.
- Trade-offs: If your employer insists on tough restrictions, we negotiate for extra compensation as a trade.
Ask about our rapid negotiation and review service for urgent settlement agreement support.
Does Reason for Exit (Redundancy or Resignation) Affect Restrictive Covenants?
Yes. Context matters:
- Redundancy: Courts may be unsympathetic to strict non-compete enforcement after redundancy, especially if your old role or business area is no longer relevant.
- Constructive Dismissal: If you resign because of your employer’s serious misconduct, post-termination restrictions are often less likely to be enforced.
- Wrongful Dismissal: If your employer breaches the contract and dismisses you wrongly, the restrictive covenants may not apply at all.
What Compensation Should I Seek When Restrictive Covenants Apply?
The more restrictive the covenants, the higher your compensation should be.
- Direct impact: Non-compete clauses can delay your return to the job market, justifying larger settlement payments.
- Negotiation: Our solicitors routinely secure enhanced ex-gratia payments or redundancy packages in exchange for accepting tighter restrictions.
- Tax efficiency: Payments for redundancy and ex-gratia sums up to £30,000 are usually tax-free (per HMRC rules), but notice pay is always taxable.
Step-by-Step: Settlement Agreement Advice & Signing
With Settlement Agreement Lawyers, the process is fast and convenient:
- Send us your draft agreement for a same-day legal review.
- Our solicitors examine all restrictive covenants and terms in detail.
- Receive clear guidance on which clauses are fair and which can be challenged, at no cost to you.
- Our solicitors negotiate directly with your employer to amend or remove unfair restrictions and improve your settlement.
- Sign digitally with same-day turnaround; our solicitor provides your vital SRA-complaint ILA certificate.
Book your remote, same-day settlement agreement advice now. Our SRA-regulated solicitors are ready to help.
FAQs: Restrictive Covenants & Non-Compete Clauses after Redundancy or Resignation
Are non-compete clauses enforceable after redundancy?
Only where they are reasonable and necessary for protecting core business interests. Overbroad clauses are unlikely to be upheld.
Can I negotiate a non-compete clause out of my settlement agreement?
Yes. Our solicitors regularly negotiate the reduction or removal of non-competes included in settlement agreements.
How long do restrictive covenants typically last?
Usually 3–12 months, with longer durations only justified for senior roles.
Does my employer pay for my legal advice?
Yes, your employer must cover all legal fees for the independent advice our solicitors give on your settlement agreement.
What happens if I breach a non-compete?
If enforced, you could face an injunction or a damages claim. However, the restriction must be strictly justifiable in law.
Are there new reforms limiting non-competes?
Government proposals may cap non-competes in some cases, but not all. Our solicitors keep up to date with employment law changes and advise you on the very latest position.
Book Your Free Settlement Agreement Consultation
Understanding restrictive covenants after resignation or redundancy is fundamental to protecting your future income and career. With our solicitors, you’ll receive clear, practical advice on all non-compete and restrictive clauses, support for negotiation, and a fully compliant ILA certificate—at no cost to you, as your employer pays our fees. Our SRA-regulated, remote service is rated Excellent on Trustpilot.
Don’t risk your next career move with unnecessary restrictions. Call Settlement Agreement Lawyers on 0207 459 4037 or book your free appointment online. Our solicitors work quickly nationwide to ensure your settlement agreement protects you—and secures the best financial and legal outcome.
This article is intended to provide expert, practical guidance for anyone considering settlement agreements including restrictive covenants or non-compete clauses. Contact our specialist solicitors for further support and representation.
