Blanket restrictive covenants and compromise agreements

London Compromise Agreement Solicitors
April 8, 2013

If you’ve been offered a compromise agreement by your employer then you may wish to take a good, thorough look at it – compromise agreements sometimes contain restrictive covenants, the purpose of which is to restrain your ability to work as you would wish after you leave your employment. This is particularly serious in cases where “blanket” restrictive covenants apply. In this post we’ll therefore take a brief look at what “blanket” restrictive covenants are, how they may affect you, and what you can do about them. We’ll do so by examining the following:

What is a compromise agreement?
What are the effect of restrictive covenants in a compromise agreement?
What is a “blanket” restrictive covenant and what effect might it have?
What can you do if your compromise agreement contains a blanket restrictive covenant?

What is a compromise agreement?

A compromise agreement is a creature of statute – a statutorily-regulated contract which allows employers and employees to reach a “compromise” in respect of potential or existing legal proceedings in the Employment Tribunal or civil courts. In effect, the employer offers the employee a benefit (whether financial or non-financial) in consideration for the employee agreeing to not pursue their statutory or common law employment claims against their employer. However, what a compromise agreement may also provide for (among other things) is the implementation or reinforcement of restrictive covenants on the employee – the contractual requirement that the (ex-)employee not undertake particular jobs or tasks after leaving their employment (i.e. contacting previous colleagues or suppliers at their ex-employer).

What are the effect of restrictive covenants in a compromise agreement?

The general effect (although there are a variety of “types” of restrictive covenant) is to stop the (ex-)employee from doing certain things after they leave their employment – working in a particular field, contacting particular people or businesses, working in a particular area etc. The scope and effect of the restrictive covenant differs enormously from one situation to another – some compromise agreements may only place minor restrictions on the activities of former employees, whereas others may seek to place much more onerous restrictions on their employees. An example of a particular “onerous” restrictive covenant is a “blanket” restrictive covenant.

What is a “blanket” restrictive covenant and what effect might it have?

A “blanket” restrictive covenant is a particularly “onerous” restrictive covenant which attempts to completely prevent the employee from doing particular things, without imposing a reasonable scope upon that ban. For example, such a covenant might attempt to impose a blanket ban on a former employee from joining a competitor or working in a particular field for a defined period of time. Restrictive covenants must be “reasonable” in order to be enforceable and valid – there must be a legitimate interest requiring protection and that the protection is no more than is reasonable having regards to the interests of the parties and the public. There will generally be a legitimate interest requiring protection but the important point is that the protection should extend no further than is reasonable in the given circumstance – a blanket ban will normally be regarded as disproportionate.

What can you do if your compromise agreement contains a blanket restrictive covenant?

If a “blanket ban” is contained within your compromise agreement then either you or your solicitor should ask for it to be removed – it’s perfectly reasonable to ask for this and if your employer is receiving experienced advice from employment law solicitors then they will be aware that a disproportionate restrictive covenant will probably be void and unenforceable.

London Compromise Agreement Solicitors are compromise agreement solicitors