Construing post-termination restrictions
Construing post-termination restrictions

The following Employment guidance note provides comprehensive and up to date legal information covering:

  • Construing post-termination restrictions
  • Relevance of timing
  • Clarity and precision
  • Ordinary meaning
  • Purposive approach
  • Contra proferentem
  • Piercing the corporate veil
  • Re-writing and severance

The construction, or interpretation, of post-termination restrictions essentially follows the same rules of construction as are used in interpreting any other type of contractual term.

The starting position is that a restriction in restraint of trade is generally unlawful and a post-termination restriction will only be reasonable, and lawful, if it does no more than the minimum necessary to protect an employer's legitimate business interests (see Practice Notes: Restraint of trade and Legitimate business interest. This means that restrictions should be drafted by reference to the employer’s specific business and the employee’s role in that business, and in the clearest possible language.

Two other general points apply:

  1. as far as possible a common sense approach should be taken to issues of construction, see in particular Ordinary meaning, below

  2. relying on support from case law for the construction of a particular clause or a specific word is unwise, given that each word in a contract will be construed in the context of that contract, which will almost certainly be different from the one under consideration. Even if the contractual drafting is very similar, the other factual circumstances will be different. Thus, while case law can be relied on for general principles of construction, and can be a useful guide as to how those principles will be applied in a particular situation, caution should be