Post-termination restrictions

Clear guidance on post-termination restrictions, helping employers and employees understand their rights, protect confidential business interests, and navigate non-compete, non-solicitation, and confidentiality clauses with confidence

Post termination restrictions govern parties’ conduct at the end of a contractual relationship. Clauses of this type most typically appear in employment contracts. However, they can also appear in commercial agreements where one business acquires another and the buyer wishes to control and limit the actions and activities of the seller and/or its directors and employees. There are various types of post-termination restrictions. The most common are:

restrictions as to future competition,
restrictions on the solicitation of customers,
restrictions on the dealing with customers and
prohibitions as to the poaching of directors and employees.

There is a wealth of case law as to how to determine the enforceability of these types of clauses. Any given clause must be reasonable; if it is not reasonable it will be held to be a restraint of trade and will be unenforceable. The party seeking to enforce valid and binding post-termination restrictions has a number of options available to them including, in certain cases, seeking and obtaining injunctions to prevent the party who has breached the restrictions from further breaches and/or bringing claims for damages which may be extensive.

In certain cases the innocent party can bring additional claims against third parties, e.g. a new employer of a former employee, where it can be shown that the new employer has induced the former employee to breach his/her enforceable post-termination restrictions.