Non-Compete Clause Example (UK): What to Include and Enforceability

If you’re hiring your first employees, bringing on a senior manager, or working with contractors who’ll have access to your customer relationships, pricing, or “how we do things” know-how, it’s normal to want one simple protection: if they leave, they can’t immediately compete with you.

That’s exactly what a non-compete clause is for.

But in the UK, non-competes aren’t “set and forget”. If your clause is too broad, too long, or doesn’t match the real risk to your business, it may be unenforceable when you actually need it.

Below, we’ll walk through a practical non-compete clause example for the UK, what you should include as a small business, when it’s likely to be enforceable, and the common pitfalls that trip businesses up.

What Is A Non-Compete Clause (And When Do Small Businesses Use One)?

A non-compete clause (also called a restraint of trade clause) is a contract term that restricts someone from competing with your business for a period of time after the relationship ends.

Small businesses typically include non-competes in:

• Employment Contract for senior employees or anyone with key client relationships
• Founder and director arrangements (often alongside a Shareholders Agreement)
• Contractor engagements, especially where you’re sharing sensitive commercial information (often tied into a Consulting Agreement)

In practice, non-competes are most useful where a person could realistically:

• take your customers or suppliers with them;
• use confidential information to undercut you;
• poach key staff; or
• set up a “copycat” business quickly using inside knowledge.

That said, non-competes are only one tool. In many cases, a well-drafted confidentiality clause and non-solicitation clause can give you protection with a lower enforcement risk (we’ll cover this later).

When Is A Non-Compete Clause Enforceable In The UK?

UK law doesn’t ban non-competes, but courts treat them cautiously because they restrict trade and a person’s ability to earn a living.

As a business owner, the key idea is this: a non-compete is only likely to be enforceable if it goes no further than reasonably necessary to protect your legitimate business interests.

1) You Must Have A “Legitimate Business Interest”

A non-compete can’t exist just because you don’t want competition. You usually need to show a legitimate business interest such as:

• confidential information (e.g. pricing, margins, strategy, product roadmap);
• trade connections (e.g. client relationships, supplier relationships); or
• workforce stability (e.g. preventing senior departures leading to team “raids”).

Confidential information should also be protected through a dedicated confidentiality clause or Non-Disclosure Agreement where appropriate.

2) The Restriction Must Be Reasonable In Scope

Courts look at what’s reasonable considering the role and the business risk. Common “reasonableness” factors include:

• Duration: How long does the restriction run for?
• Geography: What area does it cover?
• Activities: What exactly is the person banned from doing?
• Seniority and access: What influence and information did the person actually have?

If you’re thinking about longer restrictions, it’s worth reading the risks around duration (including why “a year” can be hard to justify) in this guide: 12-Month Non-Compete Clause.

3) It Needs To Be Properly Incorporated Into A Binding Contract

Even a perfectly drafted clause won’t help if it isn’t part of a legally binding agreement (or if you’ve tried to introduce it incorrectly after the relationship has already started).

Getting the legal basics right matters here - offer, acceptance, consideration, and clear written terms. If you’re unsure whether your arrangements “count” as binding terms, this overview on legally binding contracts explains the fundamentals in plain English.

In employment, if you add new restrictions later (for example, after a promotion), you often need to handle contract variation carefully so the restriction is enforceable.

Non Compete Clause Example (UK) For Small Businesses

Below is a practical non-compete clause example written in a style commonly used in UK commercial and employment agreements. This is a general example only - the right clause depends heavily on the role, industry, and your actual risk profile.

Example Non-Compete Clause

Non-Compete

In order to protect the legitimate business interests of the Company, including its confidential information and trade connections, the Individual covenants that they shall not, without the prior written consent of the Company, for a period of months after the Termination Date:

1. Competing Business: be engaged, concerned, or interested (whether as an employee, director, consultant, partner, member, shareholder or otherwise) in any business which competes with the Company’s business as carried on at the Termination Date (a Competing Business);
2. Restricted Area: where such Competing Business is carried on within -mile radius of ] (the Restricted Area);
3. Restricted Activities: provided always that this restriction shall only apply to roles or activities which are the same as, or materially similar to, those performed by the Individual during the period of months prior to the Termination Date.

Permitted Shareholding: Nothing in this clause shall prevent the Individual from holding for investment purposes only up to % of any class of shares or securities in a company listed on a recognised investment exchange.

Severability: Each restriction in this clause is intended to be separate and severable. If any restriction is found to be void or unenforceable, the remaining restrictions shall continue to apply to the fullest extent permitted by law.

Why this example works (in principle): it limits the restriction by time, geography, and activities, and it links the clause to legitimate business interests. Those are exactly the features that tend to make a clause easier to justify.

But don’t copy/paste blindly: if your business is remote-first, “within 10 miles” might be meaningless, and if your customers are global, “UK only” might not reflect the commercial reality. The clause has to match your actual business model.

What Should You Include In A Non-Compete Clause?

If you want a non-compete clause that stands up when tested, aim for clarity and tailoring. A good clause usually answers: who is restricted, from what, for how long, and where?

1) Define The “Competing” Activities

“Competing” is often where clauses become too broad. Instead of banning someone from working in an entire industry, consider limiting it to:

• the same services/products you actually offer;
• the same customer type (e.g. SMEs in hospitality, not “all businesses”);
• the same role or function (e.g. sales, product development, operations).

This is especially important for multi-service businesses. If you do “marketing and web development”, but the individual only worked on web development, banning them from all marketing work may be hard to justify.

2) Choose A Realistic Time Period

There’s no magic number that guarantees enforceability, but as a small business you should be asking:

• How long would it realistically take to protect our client relationships?
• How long until the information they know becomes outdated?
• How long would it take us to replace them and stabilise accounts?

In many cases, 3–6 months is easier to defend than 12 months, but it depends on seniority and industry.

3) Add A Geographic Limit (Where It Makes Sense)

Geographic limits can make a clause look more reasonable, but only if it matches how you operate.

For example:

• If you’re a local trades business, a radius limit can be appropriate.
• If you’re an online service provider working UK-wide, a UK limit may be more realistic.
• If you have genuinely international clients, you may need a more nuanced approach (or rely more heavily on confidentiality and non-solicitation instead).

4) Consider Including A “Permitted Shareholding” Carve-Out

A common drafting touch is allowing someone to hold a small percentage of shares in a public company (as a passive investor). It helps avoid arguments that the clause is unreasonably strict.

5) Align It With Your Other Post-Termination Restrictions

A non-compete is usually part of a wider set of protections, such as:

• Confidentiality: to stop misuse of sensitive information (sometimes backed by a separate Non-Disclosure Agreement).
• Non-solicitation: to prevent approaching your customers, suppliers, or staff.
• Non-dealing: to prevent doing business with your customers even if the customer approaches them first.

If you’re engaging a contractor (rather than an employee), you’ll often want these restrictions set out cleanly in the main engagement terms, such as a Consulting Agreement, because your risk is usually about confidential information and client relationships rather than “restraint of trade” in the classic employment sense.

Common Non-Compete Pitfalls (And How To Avoid Them)

Non-competes often fail not because the idea is wrong, but because the drafting and process don’t match real-world business needs.

1) Using A One-Size-Fits-All Template

A generic clause is one of the biggest risks for small businesses.

Why? Because enforceability depends on the specific role, the nature of your business, and what you’re genuinely protecting. A template that bans “any competing business anywhere in the world for 12 months” might sound protective, but it’s also the kind of wording that can be difficult to enforce.

If you want a clause that’s fit for purpose, it’s usually worth getting a lawyer to tailor it - especially for senior roles and founder exits.

2) Going Too Broad On “Competing Business”

A clause that effectively stops someone working in their industry at all is more likely to be challenged.

A better approach is to narrow restrictions to what actually creates risk, such as:

• your specific service line;
• your target customer segment;
• the function they performed (e.g. sales to your accounts).

3) Overreaching On Time Period (Especially 12 Months By Default)

Long restrictions are tempting, but they can be hard to justify. The bigger the restriction, the more you may need to show why it’s genuinely necessary.

If you’re considering 12 months, make sure you can explain (with real business logic) why 3–6 months wouldn’t protect you.

4) Trying To Introduce A Non-Compete After Someone Has Started

This one catches businesses out.

If you add a non-compete after the relationship begins, you need to handle the contract variation properly (including consideration). Otherwise, you might end up with a clause that looks fine on paper but isn’t enforceable in practice.

This is one reason it’s best to set the right restrictions from day one in a tailored Employment Contract (or contractor agreement) rather than trying to “patch” it later.

5) Relying On A Non-Compete Instead Of Strong Confidentiality Controls

Non-competes aren’t a substitute for good confidentiality and IP protections. If your real concern is “they’ll take our IP / pricing / methods”, you’ll also want to consider:

• clear confidentiality clauses and policies;
• return of company property and access removal processes;
• IP ownership terms (especially for contractors);
• standalone NDAs for particularly sensitive projects.

In many situations, a strong confidentiality position is easier to enforce than a broad non-compete.

6) Forgetting The Business Context (Employees vs Founders vs Contractors)

Non-competes often appear in different documents for different relationships:

• Employees: usually in an employment contract, and reasonableness is assessed in light of the role and what the employee knew/controlled.
• Founders / shareholders: often dealt with in equity documents like a Shareholders Agreement, where restrictions may be more commercially justifiable (particularly on an exit).
• Contractors / consultants: commonly included in service terms, often alongside robust confidentiality and IP assignment provisions (for example in a Non-Compete Agreement where a standalone arrangement is needed).

Each context is different, and drafting should reflect that.

Key Takeaways

• A well-drafted non-compete clause can protect your small business’s confidential information, customer relationships, and workforce stability when someone leaves.
• In the UK, a non-compete is only likely to be enforceable if it protects a legitimate business interest and is reasonable in time, geography, and the activities restricted.
• A practical non-compete clause example will usually include clear definitions, a limited duration (often 3–6 months), sensible geographic scope, and a restriction tied to the person’s actual role.
• Common pitfalls include using generic templates, drafting restrictions that are too broad or too long, and trying to introduce a non-compete after someone has already started without properly varying the contract.
• Non-competes work best when paired with other protections like confidentiality, non-solicitation, and well-structured contracts for employees, founders, and contractors.

If you’d like help putting the right restrictions in place (without accidentally making them unenforceable), you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.