What is Restrictive covenant?
Restrictive covenant, also known as a negative covenant, refers to a clause in the employment contract which restricts key employees from engaging in certain work activities for business competitors/starting their own similar business for a certain period of time after leaving current employer.
Restrictive covenant definition
Restrictive covenant, also known as a negative covenant, refers to a clause in the employment contract which restricts key employees from engaging in certain work activities for business competitors/starting their own similar business for a certain period of time after leaving current employer.
Types of restrictive covenants
• On-competition covenants: restrictions on the former employee working in similar employment for a competitor
• Non-solicitation covenants: prevent poaching of clients/customers/suppliers of the former employer
• Non-dealing covenants: prevent a former employee from dealing with former clients/customers/suppliers, regardless of which party approached the other
• Non-poaching covenants: prevent an employee poaching former colleagues