Key Takeaways
- Restrictive covenants after exit, including non-compete and confidentiality clauses, can legally limit your ability to work for competitors or use sensitive information after leaving a role.
- Not all non-compete clauses or confidentiality clauses are enforceable in the UK, as they must protect a legitimate business interest and be reasonable in scope, duration and geography.
- Settlement agreements often restate or introduce new restrictive covenants, so our solicitors review these clauses to ensure you are not unfairly restricted from finding new work.
- You can negotiate restrictive covenants in settlement agreements, and our solicitors can help reduce their impact or remove overly broad clauses before you sign.
- Ignoring or breaching a restrictive covenant risks legal action from your former employer, which can also affect your new job or future employment prospects.
- If your exit is due to redundancy or potential wrongful dismissal, the enforceability of post-termination restrictions may be weaker, and our team can advise on your options.
- Our SRA regulated service is free to the employee because your employer typically covers all legal costs for independent settlement agreement advice.
- Settlement Agreement Lawyers is rated Excellent with over 1,400 five-star reviews of our lawyers on Trustpilot, Google, and other trusted platforms.
Restrictive covenants after exit: how non-compete and confidentiality clauses can limit your next job
If you have been offered a settlement agreement on leaving your job—whether due to redundancy, performance management, or mutual agreement—it’s vital to understand how restrictive covenants after exit, including non-compete and confidentiality clauses, could impact your future employment. By law, you must obtain independent legal advice before signing such an agreement. Typically, your employer pays for this, so our solicitor’s review and advice will cost you nothing.
Restrictive covenants may prevent you working for specific competitors, contacting clients, or disclosing confidential information after employment ends. Not every restriction can be legally enforced and some may go further than is fair—so it’s crucial to have our solicitors check and, where necessary, negotiate these clauses. Our solicitors explain each clause’s practical impact, challenge unfair terms, and guide you on your legal protections, helping you move forward with confidence.
To discuss your settlement agreement and protect your future job prospects, call our solicitors on 0800 054 1144 or book your settlement agreement advice online.
Restrictive covenants after exit: how non-compete and confidentiality clauses in a settlement agreement can limit your next job
Restrictive covenants after exit are clauses in your settlement agreement that can significantly impact your career. These terms govern your activities after your employment ends; they may restrict where you can work, who you can contact, and how you use information gained during your time with an employer.
The scope of these covenants—such as duration, area, and the specific activities prohibited—must not be broader than necessary. Settlement agreements often present new or updated covenants, replacing those in your original contract. Accepting terms without scrutiny can limit job opportunities and future earnings.
Our solicitors assess every restrictive covenant in your proposed agreement, explain what it means in practice, and negotiate with employers if the restrictions are excessive. Careful review at this stage is essential.
Before your appointment, write down the types of jobs and employers you hope to work for next. Sharing this with our solicitors ensures we can advise if any provisions would unfairly hinder your career plans and negotiate suitable carve-outs.
What are restrictive covenants in settlement agreements?
Restrictive covenants in settlement agreements are legal requirements that bind you after your job ends. Employers use them to protect confidential information, business relationships, and staff. These covenants can stretch significantly beyond your normal contractual obligations, often remaining enforceable for months after your exit.
Typically, these include non-compete (preventing work for competitors), non-solicitation (banning you from poaching clients), non-dealing (prohibiting you from doing business with certain clients at all), non-poaching (refusing future contact with colleagues), and confidentiality clauses. They become binding once you have signed the agreement and obtained independent legal advice, as set out in law.
It is vital to consider whether each covenant is reasonable in duration, geography, and scope, as overreaching terms may be unenforceable—but are best challenged before signing.
One financial services employee was given an 18-month UK-wide non-compete. Our solicitor negotiated to reduce it to a six-month restriction, limited to specific direct competitors, giving the client realistic job options.
Why is independent legal advice (ILA) required for restrictive covenants? (s.203 Employment Rights Act 1996 explained)
Independent legal advice (ILA) is mandatory for settlement agreements in England and Wales, under section 203 Employment Rights Act 1996. This ensures you understand the statutory claims and potential rights you are waiving, including your ability to challenge unfair restrictive covenants. Without ILA, your agreement is not legally binding.
Our solicitors meet with you to cover all settlement terms and their consequences, including restrictions on your next job. We explain your position in plain English, negotiate changes, and then issue our ILA certificate confirming you have been properly advised. Importantly, your employer pays for our advice and this is usually capped to ensure there is no charge to you.
Never sign or resign before your ILA appointment. Waiting gives our solicitors time to assess and negotiate the settlement—helping you avoid unfair or unclear restrictions.
If you have restrictive covenants in your settlement agreement, speak to our settlement agreement solicitors on 0800 054 1144 or book your settlement agreement advice online for a same-day remote ILA appointment.
Are non-compete and confidentiality clauses legally enforceable after exit in the UK?
Non-compete and confidentiality clauses are enforceable if they are reasonable in purpose, scope, and length and are designed to protect legitimate business interests under UK law. Courts apply the doctrine of restraint of trade: any overly broad clause will be struck out or narrowed.
For non-competes, the accepted maximum is usually up to twelve months, but this must match your role and the threat perceived by the employer. Confidentiality clauses are more likely to stand, but they cannot prevent whistleblowing or the use of general skills. If the covenants are too wide or unjustified, our solicitors can negotiate amendments or advise you on challenging enforceability.
A software engineer’s non-compete banned them from working with any technology company in Europe for a year. Our solicitor argued this was excessive and negotiated a six-month limit with coverage restricted to a few UK competitors.
What types of post-termination restrictions might you face?
Settlement agreements can contain several forms of post-termination restrictions. Knowing what each covers helps you evaluate their impact.
Non-compete clauses and their impact on future job options
Non-compete clauses stop you working for, or starting, a competing business for a defined time and area. The narrower these restrictions, the more likely they are to be enforced in court. Broad bans—covering unrelated industries or countries—are rarely justified.
Tell our solicitors if you plan to change sector or role. We can often persuade employers to exclude these from restrictive covenants, so you can pursue new directions freely.
Confidentiality clauses after leaving: what are you prohibited from sharing?
These clauses make you keep business-sensitive information secret after leaving. While they can last indefinitely, they must be clear and only relate to genuine confidential data—such as trade secrets, not your general skills or experience.
An operations manager’s vague confidentiality clause covered “all know-how”. Our solicitor rewrote it to specify only company financial data and client lists, giving clarity without unfairly restricting her.
Non-solicitation, non-dealing, and non-poaching clauses: what do they cover?
- Non-solicitation: prohibits you from approaching former clients or suppliers.
- Non-dealing: forbids any business contact, even if clients approach you first.
- Non-poaching: bans you from recruiting former colleagues.
All must be specific about who is off-limits and for how long—usually capped at twelve months.
Ask employers for a list of protected individuals or clients. Agreements without such lists create uncertainty and raise the risk of accidental breaches.
How to negotiate restrictive covenants in a settlement agreement
Employers often use standard, wide-reaching post-termination restrictions—but these are a starting point, not the last word. You can negotiate the scope, reduce the time period, and request exclusions for non-competitive roles.
Our solicitors examine each term and suggest appropriate amendments tailored to your job prospects. The negotiation process can also yield additional compensation if you accept significant constraints that delay your re-employment.
A marketing executive’s settlement included a 12-month, UK-wide non-compete. Our solicitor limited it to three months and direct competitors, with the employer also agreeing to provide a reference—dramatically improving her options.
If you have been offered a settlement agreement with restrictive covenants, call our settlement agreement solicitors on 0800 054 1144 or book your settlement agreement advice online for a free employee consultation.
Redundancy, wrongful dismissal, and the enforceability of post-termination restrictions
If you are leaving by redundancy or believe you have been unfairly dismissed, courts require stronger justification for enforcing restrictive covenants. If an employer no longer has a business interest to protect, those restrictions may be void. See our redundancy advice and unfair dismissal guidance for more.
A settlement agreement may, however, include fresh restrictions even after a dismissal—this is why our legal advice can be vital. You may be asked to give up arguments that normally help you challenge restrictions.
If you feel your exit was not handled legally, bring this to our solicitor’s attention—it can help in negotiating the removal or softening of restrictive covenants.
Key financial considerations: is your settlement offer fair, and are further restrictions justified?
Your financial settlement should reflect the restrictions placed on you. If post-termination clauses make it harder to find work, you may be entitled to more compensation (above basic statutory payments). Consider unused holiday pay, your notice period, payments in lieu, and whether everything has been calculated accurately. Some payments, such as those specifically for restrictive covenants, are taxable—see our settlement agreement calculator to check what you may receive.
An IT contractor’s wide non-compete risked months out of work. Our solicitor obtained an uplift in their settlement to account for the restraint, securing vital financial breathing space.
Tax on settlement agreement payments and restrictive covenant compensation
Severance pay, compensation for loss of employment, and payments for restrictive covenants are all taxed differently. HMRC usually allows the first £30,000 of redundancy or ex gratia sums to be tax-free under current rules, unless the payment is for remaining salary, notice, or holiday pay—all of which are taxable.
Payments made for restrictive covenants—for example, acceptance of a non-compete—are fully taxed as earnings. Clear, accurate drafting in your agreement means you avoid overpaying tax or facing HMRC disputes later.
| Payment Type | Tax-Free? | Subject to Income Tax & NICs? |
|---|---|---|
| Redundancy/ex gratia (up to £30,000) | Yes | No |
| Holiday pay, notice/PENP | No | Yes |
| Restrictive covenant payment | No | Yes |
Ask our solicitors to check that the agreement separately itemises notice, ex gratia, and restrictive covenant compensation to optimise your tax position.
Risks if you breach post-termination restrictions (and how new employers may be affected)
Breaching a restrictive covenant may have serious consequences. Your former employer could seek an injunction to stop you taking up a new role, claim damages, or even reclaim settlement money. Your new employer may also face claims if they encourage or benefit from your breach—some employers will withdraw job offers if risks are identified. Settlement agreements often include clauses allowing for clawbacks or withdrawal of references if you breach restrictions.
A sales manager breached a non-compete and faced an emergency injunction, halting their new employment. The risk and cost of litigation could have been avoided if the clauses had been limited at the outset.
If you are uncertain about the scope or risk of your restrictions, call our solicitors on 0800 054 1144 or book your settlement agreement advice online. There is no cost to you—our employer-funded service gives you specialist protection.
Step-by-step: How does the settlement agreement signing process work?
The settlement agreement process is straightforward with the right advice. Here is how it works:
- Receive your draft agreement, checking especially for restrictive covenants.
- Contact our solicitors—call or book ILA online—and send over the agreement and your employment contract.
- Our solicitor reviews the terms, explains risks or ambiguities, and asks about your future career plans.
- We advise you in plain English on all options, and handle negotiations if changes are required.
- Once you are happy, you sign the agreement during our remote meeting.
- Our solicitor issues the ILA certificate and shares this with your employer.
- Your employer processes your payment and the restrictions formally start.
Throughout, our salaried, SRA-regulated legal team is funded by your employer—so there is no cost to you.
Keep copies of every revised draft or email during settlement discussions to ensure the final, signed version matches what was agreed.
Why Choose Settlement Agreement Lawyers?
Our solicitors are dedicated settlement agreement experts. We offer fast, remote, SRA-regulated advice on all aspects—including thorough review and negotiation of restrictive covenants after exit: how non-compete and confidentiality clauses can limit your next job. Thousands of employees across England and Wales have relied on us, from junior staff to directors, to secure fair terms and freedom to move on, with our costs covered by employers.
For insights into real results, read our client success stories, or for broader employment law help visit our settlement agreement advice hub.
A senior executive faced a six-month global non-compete. Our solicitor secured a three-month limit for just the UK, plus an agreed employer reference—opening new doors.
Frequently Asked Questions About Restrictive covenants after exit: how non-compete and confidentiality clauses can limit your next job
Can my ex-employer stop me working for a competitor after leaving?
Yes, if you have signed a clear and reasonable non-compete clause in your settlement agreement, your ex-employer can restrict you working for named competitors for the duration and territory agreed. However, overly wide or lengthy restrictions are often unenforceable. Always get legal advice before agreeing.
Are non-compete clauses enforceable if I am made redundant?
Non-compete clauses may still be enforced after redundancy—but only if the employer has a continuing business interest to protect and the restriction is reasonable. If a business shuts a whole division or you are surplus to requirements, enforceability is often less likely. Seek specialist advice to review your case.
What is the difference between a non-compete and a confidentiality clause?
A non-compete clause prevents you joining or setting up with competitors post-exit for a set time and location. A confidentiality clause obligates you to keep specific sensitive information secret after leaving but does not restrict general usage of acquired skills or knowledge.
Can restrictive covenants be changed or removed before I sign a settlement agreement?
Yes, restrictive covenants can be negotiated and amended before you sign—these changes are common. Employers frequently agree to reduce duration, adjust scope, or remove restrictions for less sensitive roles. Never sign until you are satisfied with the terms after legal advice.
How long and how far can a non-compete clause restrict my career?
Enforceable non-compete durations in the UK are typically three to twelve months. Geographical scope must relate to the employer’s actual market. Anything broader is rarely justifiable or enforceable, making legal review essential before agreeing.
What happens if I breach a restrictive covenant after leaving my job?
Breaking a valid restrictive covenant can result in court actions against you (such as injunctions or damages) and may cause your new employer to withdraw an offer if they are also at risk. Immediate legal advice is required if you’re concerned about a breach.
Who pays for legal advice on restrictive covenants in a settlement agreement?
Your employer is legally required to fund your independent legal advice for the settlement agreement—including review of any restrictive covenants. There is no charge to you; our fee is covered by your employer’s contribution.
Does wrongful or unfair dismissal release me from post-termination restrictions?
Often, yes—if the employer has acted unlawfully or unfairly, courts may refuse to enforce restrictive covenants. However, fresh restrictions set out in a settlement agreement may override this. Always obtain legal advice before signing, to protect your rights.
Book a Free Settlement Agreement Review: Protect Your Future Career from Unfair Restrictive Covenants
Understanding restrictive covenants after exit—such as non-compete and confidentiality clauses—is key to protecting your next career move when signing a settlement agreement. Our specialist solicitors provide clear advice on enforceability, financial consequences, and tax issues. With our remote, employer-funded service, you have nothing to lose and everything to safeguard.
If you have been offered a settlement agreement with post-termination restrictions or want professional guidance, call Settlement Agreement Lawyers on 0800 054 1144 or book your settlement agreement advice online for a same-day remote ILA appointment.
