Q&As

If the employer goes into administration, does this render a post-termination restriction (eg a non-competition clause) unenforceable?

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Published by a LexisNexis Employment expert
Published on: 07 March 2025
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The mere act of a company going into administration does not render a post-termination restriction (also known as a restrictive covenant) unenforceable.

Consideration will need to be given to:

  1. •

    the circumstances in which a post-termination restriction becomes unenforceable, and

  2. •

    the effect of administration on the contract of employment

Effect of repudiatory breach

A repudiatory breach of contract by the employer will usually result in the employer being unable to rely on any post-termination restrictions (Billposting Co Ltd v Atkinson, Cantor Fitzgerald v Bird).

However, there will be no repudiatory breach or wrongful dismissal where the terms of the contract expressly permit the employer to give pay in lieu of notice rather than allowing the employee to work their notice, and the employer dismisses in accordance with those contractual terms (Stewart (Rex) Jeffries Parker Ginsberg v Parker).

For more information, see:

  1. •

    Practice Note: Post-termination restrictions—the

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