Incorporation of post-termination restrictions
Incorporation of post-termination restrictions

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

  • Incorporation of post-termination restrictions
  • Introducing post-termination restrictions before the start of employment
  • Introducing post-termination restrictions during employment
  • Introducing post-termination restrictions on termination
  • Post-termination restrictions following TUPE transfers

For a post-termination restriction to be enforceable by the employer, it first has to be a contractual term; that is, incorporated into a contract between the employer and employee. This will usually be the contract of employment, but may in some cases be a separate collateral contract (see Practice Note: Restraint of trade—Indirect forms of restraint). Post-termination restrictions will often be introduced at the start of employment but may also be introduced at a later stage. The usual contractual requirements will apply, namely offer, acceptance and valid consideration.

Introducing post-termination restrictions before the start of employment

The most straightforward method of introducing post-termination restrictions is to do so before a contract of employment is agreed between the parties. At the time of the offer of employment, the employer includes in the offer the terms of proposed post-termination restrictions. The employee is free to accept or reject the terms on offer, including the restrictions. The employer is not obliged to take on the employee unless he is willing to agree to abide by the restrictions.

The employer should be careful to ensure that the post-termination restrictions it is seeking to include in the prospective employee's contract are suitable and reasonable. The reasonableness of post-termination restrictions will be judged by reference to the employer's business and the job the individual employee is undertaking