Restrictive covenants are terms in a contract that prevent employees using business contacts or information gained in their role to compete with you. Restrictive covenants may be used in employment contracts signed at the beginning of the relationship, or settlement agreements made to end the working relationship.
The terms of restrictive covenants will vary depending on the interests you want to protect. Some common clauses prevent employees:
working for a competitor
setting up their own business
approaching your clients
working with your clients at all
recruiting your other employees
making use of sensitive business information – for example, knowledge of manufacturing processes , critical financial information or new product development
Restrictions are only enforceable if they uphold a legitimate business interest and must be no more restrictive than is reasonably necessary. You cannot used covenants purely to limit competition. Fair competition is permitted, it is only unfair competition that is unlawful.