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Successful businesses thrive on having an edge – that competitive advantage – over their competitors. In today’s fast‐paced 2025 marketplace, safeguarding your unique business insights is more critical than ever.
And often you’d want to keep that competitive advantage a secret from your rivals.
However, you can’t keep all that information to yourself. You simply cannot run a successful business without the support of your team – with whom you must share confidential business know‐how and resources.
If you share such information with an employee or contractor but they later leave your organisation, what happens next?
How do you prevent your own team from inadvertently becoming your competitors?
Restraint Clauses
This is where restraint clauses come in handy. Not only do they provide clarity in your contractual relationships, but they also help safeguard your commercial interests – especially in an evolving legal environment like that of 2025. For more on the different approaches, see our detailed guide on what are the types of restraint clauses.
First of all, you should have a formal contract with anyone doing work for your business. Typically, these personnel are categorised as either employees or contractors, and in your Employment Agreements and Contractor Agreements it is wise to include a well‐drafted restraint clause.
There are 3 main types of restraint – non-compete, non-solicitation and non-poach – each designed to protect different aspects of your business.
- Non-compete
- Non-solicitation
- Non-poach
Understanding the different types of restraint and their limitations can help you decide how best to protect your business’s legitimate commercial interests.
Non-Compete
Non-compete clauses are designed to prevent a former worker from joining a competitor or starting a competing business by using your confidential information.
Of course, you can’t simply prevent someone from ever working in a similar sector – that would be an overly harsh restriction on their ability to earn a living.
That’s why the courts in 2025 will only enforce non-compete clauses that are considered reasonable and proportionate to protecting the legitimate business interests of the former employer.
If you’re wondering what is meant by ‘legitimate business interests’, keep reading – we’ve expanded on this further below. In certain circumstances, a separate Non-Compete Agreement may be worth putting into place to provide additional protection against competition from those with access to your confidential practices.
Non-Solicitation
A non-solicitation clause aims to prevent a former employee or contractor from enticing away your clients or other key business affiliates.
Your team members often have access to client databases and maintain strong relationships with your customers. This is an asset for your business while they are with you.
However, once they depart, you certainly do not want them to take your clients with them. Like non-compete clauses, non-solicitation clauses must be reasonable in scope and duration.
Non-Poach
The third primary type of restraint is non-poach, which specifically prevents a former worker from recruiting your other valuable employees. It is very similar to a non-solicitation clause, but it targets internal recruitment rather than customer relationships.
This measure helps maintain the stability and integrity of your team, ensuring that valuable in-house expertise remains with your organisation.
Legitimate Commercial Interests
All these restraints will only be enforceable if they are reasonable and directly protect your business’s genuine commercial interests. This is the cornerstone of current contract law.
Unlimited restraints are considered unfair because they would unduly restrict individuals from securing future employment. Therefore, the law permits only those restraints that protect interests such as intellectual property, confidential information, business know-how, trade secrets and business goodwill.
How To Enforce A Restraint Clause
Having a well-drafted restraint clause in your contracts is crucial. If the clause is too weak, you may fail to protect your business interests effectively; if it is too restrictive, the courts may refuse to enforce it.
In 2025, courts continue to scrutinise restraint clauses to ensure they are both fair and necessary. It is therefore advisable to draft these clauses with precision and clear justifications.
Getting an experienced lawyer to draft your contracts is the best way to ensure that your restraint clause is appropriate. For instance, our article on how to choose the right small business lawyer offers valuable guidance on securing the legal expertise you need.
Things To Think About
When considering what would constitute a reasonable restraint, your lawyer should be able to offer tailored advice based on the specifics of your business. It’s also useful to ask yourself some critical questions, such as:
- What information and processes add the most value to my business?
- Who are my main competitors and where are they based?
- Is it vital to restrict certain business activities for a fixed duration?
- Is it necessary to limit such activities within a specific geographical area?
What To Take Away…
It is impossible – and impractical – to keep all your intellectual property and business know-how a secret from the people you work with. Instead, using well-calibrated restraint clauses in your contracts with employees and contractors helps safeguard your commercial interests if they ever leave your business.
Restraints are designed to protect your business, but they must not be so onerous as to unreasonably limit your former workers from continuing their careers.
Having a lawyer draft your employment and contractor agreements assists you in determining which legitimate commercial interests to protect, ensuring that your contracts are both effective and enforceable. This approach not only offers security but also maintains fairness in the eyes of the law.
The peace of mind that comes from knowing you’re as protected as possible – without risking unenforceable restraints – is priceless.
In today’s evolving work environment where remote and hybrid models have become more prevalent, it is also essential to review your restraint clauses regularly. By keeping abreast of changes in employment law and adapting to new trends – such as those discussed in our Working From Home Legal Issues guide – you can ensure your contracts remain compliant and robust well into 2025 and beyond.
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