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AI Generated British Restrictive Covenant Agreement
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Example of a Restrictive Covenant for use in the United Kingdom</b> generated by our AI model.
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When do you need a Restrictive Covenant in the United Kingdom?

Protecting Business Interests
Use a restrictive covenant to safeguard your company's confidential information, client relationships, or key staff from being taken by competitors after someone leaves.
During Employee Exits
It's essential when an employee departs to prevent them from immediately joining a rival or starting a similar business that could harm your operations.
In Business Sales
When selling your company, include these clauses to stop the seller from launching a competing venture that might draw away customers or undermine the sale.
For Partnership Dissolutions
In ending business partnerships, they help ensure former partners don't use shared knowledge to compete directly against the remaining business.
Importance of Clear Drafting
A well-written document ensures the restrictions are fair and enforceable, avoiding court challenges that could waste time and money.
Avoiding Legal Pitfalls
Poorly drafted covenants can be ruled invalid, leaving your business unprotected, so professional wording is key to making them hold up in disputes.

British Legal Rules for a Restrictive Covenant

Must Protect Legitimate Interests
The restriction can only be included if it safeguards the employer's real business needs, like protecting client relationships or trade secrets.
Needs to Be Reasonable
The terms must be fair and not overly broad, considering the employee's role, the time period, and the geographic area covered.
Enforceability in Court
If a judge finds the clause too restrictive, they may change or strike it out, making it unenforceable as written.
Time Limits Matter
Restrictions lasting longer than necessary, such as more than a year for senior roles, are often seen as unreasonable.
Geographic Scope is Key
The area covered should match the business's operations; a nationwide ban might not hold up if the job was local.
Applies After Employment Ends
These clauses only kick in once the employee leaves the job and aim to prevent unfair competition.
Important

Using the wrong structure for a non-compete agreement may render it unenforceable under UK competition law.

What a Proper Restrictive Covenant Should Include

  • Non-Compete Clause
    This limits the employee from working for competitors in a specific area for a set time after leaving the job.
  • Non-Solicitation Clause
    This prevents the employee from contacting or taking away the company's customers or clients for a defined period.
  • Non-Poaching Clause
    This stops the employee from hiring or recruiting the company's other staff members after they leave.
  • Confidentiality Agreement
    This requires the employee to keep the company's private information secret both during and after employment.
  • Geographic Limits
    This specifies the area where the restrictions apply, such as a city or region, to keep them reasonable.
  • Time Restrictions
    This sets a clear end date for the restrictions, usually 3 to 12 months, to ensure they are not overly long.

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Why Use Docaro?

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Quickly generate a comprehensive Restrictive Covenant, eliminating the hassle and time associated with traditional document drafting.
Guided Process
Our user-friendly platform guides you step by step through each section of the document, providing context and guidance to ensure you provide all the necessary information for a complete and accurate Restrictive Covenant.
Safer Than Legal Templates
We never use legal templates. All documents are generated from first principles clause by clause, ensuring that your document is bespoke and tailored specifically to the information you provide. This results in a much safer and more accurate document than any legal template could provide.
Professionally Formatted
Your Restrictive Covenant will be formatted to professional standards, including headings, clause numbers and structured layout. No further editing is required. Download your document in PDF, Microsoft Word, TXT or HTML.
Tailored to British Law
Our AI model considers the latest legal standards and regulations of the United Kingdom during the drafting process.
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Free Example Restrictive Covenant Template

Below is a free template example of a Restrictive Covenant for use in the United Kingdom generated by our AI model.

The clauses in your actual Restrictive Covenant will vary from this example as they will be entirely bespoke to your requirements as set out in the questionnaire you complete.

Restrictive Covenant Agreement

1
RECITALS

1.1

This Agreement is made on 2024-01-15 between The Company a software development firm specializing in custom web applications and mobile apps for small to medium-sized enterprises (the Company) and the Employee.

1.2

The Employee commenced employment with the Company on 2020-03-15.

1.3

The Employee is employed as a Senior Software Developer and in that role leads a team of five developers designs software architectures codes core features and collaborates with clients to ensure project deliverables meet their requirements.

1.4

The primary purpose of this Agreement is to protect Confidential Information.

1.5

The business of the Company that this Agreement aims to protect is the development and provision of bespoke software solutions including web and mobile applications for businesses in the retail and finance sectors.

1.6

The Employee has had the opportunity to take independent legal advice before entering into this Agreement.

1.7

The Employee expressly acknowledges that during their employment they will have access to the Company's confidential information, will build customer relationships, and will have influence over key staff, making the restrictions in this Agreement necessary to protect the Company's legitimate business interests.

2
DEFINITIONS

2.1

In this Agreement the following terms shall have the following meanings.

2.1.1

Confidential Information means any information disclosed by the Company that is not publicly known including business strategies client details and proprietary technology and shall include without limitation source code algorithms client specifications product development plans customer lists financial data trade secrets and any other information relating to the Company's software development processes.

2.1.2

Restricted Period means the period of 6 months immediately following the termination of the Employee's employment with the Company (or if the Employee is placed on garden leave the period of 6 months immediately following the end of any such garden leave).

2.1.3

Restricted Business means the development and provision of bespoke software solutions including web and mobile applications for businesses in the retail and finance sectors to the extent that the Employee was materially involved in such activities during the 12 months prior to the termination of their employment.

2.1.4

Restricted Customers means any individual or entity that has purchased goods or services from the Company in the last 12 months prior to the termination of the Employee's employment and with whom the Employee had material dealings during that period.

2.1.5

Key Employees means those senior developers project managers or other employees or contractors of the Company with whom the Employee had material dealings during the 12 months prior to the termination of their employment (by way of example only this may include members of the Employee's development team).

2.1.6

Garden Leave means a period during which the Company requires the Employee not to attend work and/or not to undertake any duties (or only specific duties) during the notice period while remaining employed and in receipt of full pay and benefits.

2.2

This Agreement is a standalone agreement supplemental to the Employee's contract of employment with the Company dated on or around 2020-03-15. The covenants in this Agreement are supported by adequate consideration including the Employee's continued employment access to confidential information and the associated benefits provided by the Company.

3
RESTRICTIVE COVENANTS

3.1

The Employee agrees to be bound by the covenants set out in this Agreement in consideration of continued employment with the Company access to confidential information customer connections and the associated benefits including salary health insurance promotion or bonus. The Employee further agrees to notify any future employer of the restrictions contained in this Agreement prior to commencing new employment.

4
LEGITIMATE BUSINESS INTERESTS

4.1

The Employee acknowledges that during their employment as a Senior Software Developer they will have access to the Company's trade secrets and confidential information (including source code and algorithms) will develop and maintain customer connections and goodwill and will have influence over key members of the workforce.

4.2

The parties agree that the covenants in this Agreement are reasonable and necessary to protect the Company's legitimate business interests in its trade secrets confidential information customer connections goodwill and the stability of its workforce.

4.3

The Employee expressly acknowledges and agrees that the restrictions in this Agreement are fair and proportionate in scope duration and geography given their senior role as a Senior Software Developer their access to confidential information and their influence over customers and key staff.

5
NON-COMPETITION

5.1

The Employee shall not during the Restricted Period and within a 25-mile radius of the Company's headquarters in Birmingham engage in the development sale or marketing of bespoke software solutions (to the extent that the Employee was materially involved in such activities) for businesses in the retail and finance sectors that compete with the Restricted Business.

5.2

The non-competition restriction in clause 4.1 shall take effect from the later of the termination of the Employee's employment or the end of any period of Garden Leave.

5.3

If a court finds any part of this clause 4 too wide it may be modified or severed to the minimum extent necessary to make it enforceable.

6
NON-SOLICITATION OF CUSTOMERS

6.1

The Employee shall not during the Restricted Period directly or indirectly solicit the business of any Restricted Customers or any clients or suppliers of the Company with whom the Employee had material dealings in the 12 months prior to termination.

6.2

The Employee shall not during the Restricted Period directly or indirectly deal with any Restricted Customers or any clients or suppliers of the Company with whom the Employee had material dealings in the 12 months prior to termination (non-dealing).

6.3

The Employee shall notify any new employer of the restrictions contained in this Agreement prior to commencing new employment.

7
NON-SOLICITATION OF EMPLOYEES

7.1

The Employee shall not during the Restricted Period directly or indirectly solicit or attempt to solicit any Key Employees or any employees or contractors of the Company with whom the Employee had material dealings for the purpose of employing or engaging them in any business competing with the Restricted Business.

8
CONFIDENTIALITY OBLIGATIONS

8.1

The Employee shall during the term of employment with the Company and for a period of 5 years from the date of termination of such employment maintain the confidentiality of all Confidential Information and shall not disclose it to any third party except where such disclosure is required by law or to professional advisors or with the prior written consent of the Company.

8.2

The Employee shall upon termination of employment return to the Company all documents materials and other items containing or relating to Confidential Information.

8.3

The obligations under this clause 7 shall survive the termination of the Employee's employment.

9
DURATION OF RESTRICTIONS

9.1

The Company may at its discretion place the Employee on Garden Leave for a maximum period of 3 months during the notice period with full pay and benefits during such period. During any Garden Leave the Employee shall not attend the Company's premises contact customers or key staff (except as directed) and the Restricted Period shall be reduced by the length of any Garden Leave served. The Company may make a payment in lieu of notice (PILON) in accordance with the Employee's contract of employment which shall not affect the enforceability of the restrictions in this Agreement.

9.2

The restrictive covenants in this Agreement shall apply for the Restricted Period which shall run from the later of the date of termination of the Employee's employment or the end of any period of Garden Leave.

10
GEOGRAPHICAL SCOPE

10.1

The restrictions in this Agreement shall apply within a 25-mile radius of the Company's headquarters in Birmingham to the extent justifiable for a Birmingham-based SME and only in relation to the specific sectors and activities in which the Employee was materially involved as a Senior Software Developer.

11
CONSIDERATION

11.1

In consideration for the Employee agreeing to the restrictive covenants contained in this Agreement (which are supported by adequate consideration beyond continued employment alone) the Employee shall receive continued employment access to confidential information customer connections and the associated benefits including salary health insurance together with any applicable promotion or bonus (particularly relevant as this Agreement is entered into after the commencement of employment).

12
MODIFICATION AND SEVERANCE

12.1

If any restriction in this Agreement is found to be unenforceable the parties agree that it may be modified by the court to the minimum extent necessary to make it enforceable. The invalidity or unenforceability of any one covenant shall not affect the validity or enforceability of the other covenants which shall remain in full force and effect.

13
SEVERABILITY

13.1

If any provision of this Agreement is held to be invalid or unenforceable in whole or in part the remaining provisions of this Agreement shall continue to be valid and enforceable.

13.2

This clause 11 shall apply to the entire Agreement including all schedules and annexes.

14
ENTIRE AGREEMENT

14.1

This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements understandings and arrangements whether oral or in writing relating to its subject matter.

14.2

This Agreement takes effect on 2024-01-15 and supersedes all prior understandings from that point.

14.3

Each party acknowledges that in entering into this Agreement it has not relied on any representation or warranty not set out in this Agreement and that liability for any pre-contractual representations is excluded to the fullest extent permitted by law.

15
GOVERNING LAW

15.1

This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the laws of England and Wales.

16
JURISDICTION

16.1

The parties irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement or its subject matter or formation.

17
ASSIGNMENT

17.1

The Employee shall not assign transfer or deal in any other manner with any of the Employee's rights and obligations under this Agreement.

17.2

The Company may assign transfer or deal in any other manner with any of its rights and obligations under this Agreement.

17.3

This Agreement shall bind and enure to the benefit of the parties and their respective successors and assigns.

18
NOTICES

18.1

Any notice given under this Agreement shall be in writing and may be served by hand delivery post or email.

18.2

Notices shall be deemed served on the date of delivery if served by hand or email or on the second business day after posting if served by post excluding non-business days when calculating such periods.

18.3

Notices to the Employee shall be sent to 123 Example Street London SW1A 1AA United Kingdom or to the Employee's last known address or email address.

18.4

Notices to the Company shall be sent to its registered office or to such other address as the Company may notify to the Employee from time to time.

19
WAIVER

19.1

No failure or delay by either party in exercising any right power or remedy under this Agreement shall operate as a waiver of that right power or remedy.

19.2

The rights powers and remedies provided in this Agreement are cumulative and do not exclude any rights powers or remedies provided by law.

20
COUNTERPARTS

20.1

This Agreement may be executed in any number of counterparts each of which when executed and delivered shall constitute a duplicate original but all the counterparts shall together constitute one agreement.

20.2

The parties may execute this Agreement by electronic signature and may exchange counterparts by email.

21
EMPLOYEE ACKNOWLEDGMENT

21.1

The Employee confirms that they have read and understood the terms of this Agreement have had the opportunity to take independent legal advice and agree that all restrictions are reasonable and necessary to protect the Company's legitimate business interests given their role as Senior Software Developer.

22
SIGNATURES

22.1

Signed by the Employee: _______________________________ Date: _______________

22.2

Signed by a duly authorised representative of the Company: _______________________________ Date: _______________

This example shows approximately 70% of a typical document and is provided for illustrative purposes only. The remaining content has been omitted.

Every document generated by Docaro is tailored to your specific circumstances, jurisdiction and the information you provide. The completed document includes all applicable clauses and provisions required for your situation.

To generate the full, personalised document, answer a short series of questions and your document will be created instantly.

Useful Resources When Considering a Restrictive Covenant in the United Kingdom

Terms restricting a worker's actions - Employment contracts ...
Written or verbally agreed terms - Employment contracts ...
Working paper on options for reform of non-compete ...
CMA response to working paper on options for reform ...
Show All Resources

United Kingdom Reference Legislation

The following legislation is relevant to the generation of a Restrictive Covenant in the United Kingdom:
This primary legislation governs employment contracts in the UK, including post-termination restrictions such as non-compete clauses, which must be reasonable in scope, duration, and geography to be enforceable. It does not directly ban non-competes but provides the framework for their assessment by courts.
Section 232 prohibits agreements that prevent or restrict a person from accepting an offer of employment, though this primarily targets 'no poach' agreements between businesses rather than individual non-competes in employment contracts. It provides a civil remedy for affected workers.
Regulates anti-competitive agreements, which could include overly broad non-compete clauses that distort competition in the labour market. The Competition and Markets Authority (CMA) may investigate such clauses under Chapter I prohibition if they have an appreciable effect on competition.

Restrictive Covenant FAQs

A non-compete agreement, also known as a restrictive covenant, is a clause in an employment contract or business sale agreement that restricts an individual from working for a competitor or starting a competing business for a specified period after leaving the company. In the UK, these are governed by common law and must be reasonable to be enforceable.
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Document Generation FAQs

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Related Articles

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