Restrictive covenant clause: Copy, customize, and use instantly
Introduction
A restrictive covenant clause is designed to limit a party's actions after the agreement is terminated. These limitations can include non-compete, non-solicitation, or confidentiality provisions to protect the business interests of the employer. The clause ensures that the party subject to the covenant cannot engage in activities that could directly harm the business after their contractual relationship ends.
Below are templates for restrictive covenant clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard restrictive covenant clause
This version provides a general framework for restrictive covenants.
The employee agrees that, for a period of [X] years following the termination of this Agreement, they shall not, directly or indirectly, engage in any business activities that compete with the business of [Company Name], within a [X] mile radius of the company’s primary place of business.
Restrictive covenant clause with provision for non-solicitation of clients
This version focuses on non-solicitation of clients.
For [X] years following the termination of this Agreement, the employee agrees not to solicit or attempt to solicit business from any clients or customers of [Company Name] with whom they had direct contact during the course of their employment.
Restrictive covenant clause with provision for non-solicitation of employees
This clause addresses non-solicitation of employees.
The employee agrees that, for a period of [X] years following the termination of this Agreement, they will not solicit, recruit, or hire any employees of [Company Name] who were employed during the term of this Agreement.
Restrictive covenant clause with provision for non-compete obligations
This version includes a non-compete obligation.
The employee agrees that, for [X] years following the termination of this Agreement, they will not engage in any business that directly competes with [Company Name] within the geographic region of [insert region], where the company operates. This includes working for, investing in, or advising any competing businesses.
Restrictive covenant clause with provision for confidentiality and non-disclosure
This version includes confidentiality and non-disclosure obligations.
The employee agrees that for [X] years after the termination of this Agreement, they will not disclose, use, or consent to the use of any confidential information belonging to [Company Name], including proprietary data, customer lists, and business strategies.
Restrictive covenant clause with provision for non-compete in specific industry
This clause restricts competition within a specific industry.
For a period of [X] years following the termination of this Agreement, the employee agrees not to engage in any business activities that directly compete with [Company Name] in the [specific industry] industry within [insert geographic region].
Restrictive covenant clause with provision for non-disclosure of intellectual property
This version focuses on intellectual property protection.
The employee agrees that, for a period of [X] years after termination, they will not disclose or use any intellectual property, patents, copyrights, or trademarks owned by [Company Name], including those created during the term of their employment.
Restrictive covenant clause with provision for non-compete within a specified region
This clause restricts competition within a specific geographic region.
The employee agrees that, for [X] years following termination of this Agreement, they will not engage in or provide services to any business that competes with [Company Name] within a [X]-mile radius of [Company Name]’s main office or primary place of business.
Restrictive covenant clause with provision for post-termination obligations
This version includes post-termination obligations.
After the termination of this Agreement, the employee agrees to fulfill all outstanding post-termination obligations, including maintaining the confidentiality of trade secrets and not competing with [Company Name] as outlined in this restrictive covenant.
Restrictive covenant clause with provision for non-solicitation of vendors
This clause addresses non-solicitation of vendors.
The employee agrees that for [X] years after the termination of this Agreement, they will not solicit, contact, or enter into any business relationship with [Company Name]’s vendors, suppliers, or contractors that they had direct dealings with during their employment.
Restrictive covenant clause with provision for non-compete for specific roles
This version ties non-compete to specific job roles.
The employee agrees that, for a period of [X] years following termination, they will not engage in any business that directly competes with [Company Name] in the role of [specific role/position] within [insert geographic region].
Restrictive covenant clause with provision for continued post-termination confidentiality
This clause extends confidentiality obligations after termination.
The employee agrees that their obligations regarding the confidentiality of proprietary information and trade secrets will continue for [X] years following the termination of this Agreement, regardless of the reason for termination.
Restrictive covenant clause with provision for non-compete during transition period
This version includes a non-compete during the transition period.
During the transition period following the termination of this Agreement and for a period of [X] months thereafter, the employee agrees not to engage in any business activities that compete with [Company Name] and will assist in transitioning duties to a successor.
Restrictive covenant clause with provision for reasonable geographic limitations
This version sets reasonable geographic limitations.
The employee agrees not to engage in any competitive activities for [X] years following termination within a [X]-mile radius of [Company Name]’s office, provided that such geographic limitations are reasonable and not overly restrictive based on the employee’s previous role.
Restrictive covenant clause with provision for non-solicitation of partners
This clause restricts solicitation of business partners.
The employee agrees not to solicit, contact, or attempt to engage any business partners or affiliates of [Company Name] for a period of [X] years following the termination of this Agreement, and will not seek to divert business opportunities away from [Company Name].
Restrictive covenant clause with provision for limitations on competitive activities
This version imposes specific limitations on competitive activities.
The employee agrees to limit their involvement in competitive activities, including direct employment, consulting, or investment in competing businesses, for a period of [X] years following termination, as further defined in Section [X] of this Agreement.
Restrictive covenant clause with provision for non-compete based on client relationships
This clause links non-compete to client relationships.
The employee agrees that, for [X] years following termination, they will not directly or indirectly solicit, work for, or otherwise engage any clients or customers of [Company Name] that they worked with during the term of their employment.
Restrictive covenant clause with provision for protection of business interests
This version protects business interests beyond the employment period.
The employee agrees that, for a period of [X] years following termination, they will not engage in any activities that would harm [Company Name]’s business interests, including but not limited to stealing business opportunities, infringing intellectual property rights, or disclosing trade secrets.
Restrictive covenant clause with provision for reasonableness of duration and scope
This clause ensures that the restrictions are reasonable.
The employee agrees to the non-compete obligations specified in this Agreement for a period of [X] years and within a geographic region of [X] miles, as long as such duration and scope are reasonable and necessary to protect the business interests of [Company Name].
Restrictive covenant clause with provision for exclusion of certain activities
This version excludes certain activities from the non-compete.
The employee agrees not to engage in competitive activities as defined in Section [X], except for the following activities: [list excluded activities], which are excluded from the non-compete provisions of this Agreement.
Restrictive covenant clause with provision for review and enforcement
This clause includes provisions for review and enforcement.
The employee acknowledges that any violation of the non-compete or non-solicitation provisions of this Agreement may cause irreparable harm to [Company Name] and agrees that the company may seek appropriate remedies, including enforcement through legal action, to prevent such violations.
Restrictive covenant clause with provision for non-compete during a merger or acquisition
This version addresses mergers and acquisitions.
If [Company Name] undergoes a merger or acquisition, the employee agrees not to engage in competitive activities for [X] years following the termination of this Agreement, in accordance with the terms outlined in the non-compete provision, even if the employee’s role or responsibilities change due to the merger.
Restrictive covenant clause with provision for enforcement in case of breach
This version focuses on enforcement.
In the event of a breach of the non-compete, non-solicitation, or confidentiality obligations, [Company Name] shall be entitled to seek an injunction and other remedies as necessary to prevent further violations and mitigate any damages caused by the employee’s actions.
Restrictive covenant clause with provision for non-compete and non-disclosure
This version includes both non-compete and non-disclosure.
The employee agrees not to engage in any competitive activities or disclose any proprietary information belonging to [Company Name] for a period of [X] years after the termination of this Agreement. This includes protecting all trade secrets and business strategies developed during the term of employment.
Restrictive covenant clause with provision for non-compete post-sale of company
This clause restricts post-sale activities.
In the event of the sale or transfer of [Company Name], the employee agrees not to engage in any competitive business within [X] miles of [Company Name] for a period of [X] years following the sale, in order to protect the interests of the company’s new owners.
Restrictive covenant clause with provision for geographic limitation
This version sets geographic limitations for non-compete.
The employee agrees that for [X] years following the termination of this Agreement, they will not engage in any competitive business within a [X]-mile radius of [Company Name]’s primary office, nor will they provide competitive services to clients located in that area.
Restrictive covenant clause with provision for non-compete based on employment
This version ties the non-compete to employment.
The employee agrees not to work for, consult with, or advise any business that competes with [Company Name] for a period of [X] years following termination, provided the employee remains in a competitive field related to their previous position.
Restrictive covenant clause with provision for enforcing restrictions in multiple jurisdictions
This version ensures enforcement across multiple jurisdictions.
The employee agrees that the non-compete and non-solicitation provisions of this Agreement shall be enforceable in all jurisdictions where [Company Name] operates, and the employee shall comply with such restrictions regardless of the geographic location of their future employment.
Restrictive covenant clause with provision for restricting financial interests in competitors
This clause addresses financial interests in competitors.
The employee agrees not to acquire any financial interest, including stocks, shares, or investments, in any competitor of [Company Name] for a period of [X] years after termination, to prevent any indirect involvement with competing businesses.
Restrictive covenant clause with provision for use of non-compete after resignation
This version applies to resignation.
If the employee voluntarily resigns from [Company Name], they agree to be bound by the non-compete and non-solicitation provisions of this Agreement for a period of [X] years following the resignation, regardless of the reason for leaving.
Restrictive covenant clause with provision for non-solicitation of clients for a specified period
This version restricts client solicitation.
The employee agrees that for a period of [X] years following the termination of this Agreement, they will not solicit or accept business from any client or customer of [Company Name] with whom they worked during their employment.
Restrictive covenant clause with provision for continued confidentiality after termination
This clause extends confidentiality after termination.
The employee acknowledges that the confidentiality provisions of this Agreement will continue to be effective after termination, and they will not disclose or use any confidential information, including business plans, marketing strategies, or client data, for a period of [X] years.
Restrictive covenant clause with provision for geographic and time-based restrictions
This version includes both time and geographic restrictions.
The employee agrees that, for a period of [X] years after termination, they will not engage in any competing business within [X] miles of [Company Name]’s primary office, ensuring that the restrictions are reasonable and necessary for protecting the business’s competitive position.
Restrictive covenant clause with provision for mutual non-compete after termination
This version applies mutual non-compete after termination.
Upon termination of this Agreement, both Parties agree to refrain from entering into any competitive business that directly conflicts with the other Party for a period of [X] years and within the same geographic region, ensuring that neither party gains an unfair competitive advantage.
Restrictive covenant clause with provision for post-termination obligations linked to client relationships
This version ties post-termination obligations to client relationships.
Following the termination of this Agreement, the employee agrees to maintain a non-solicitation of any clients or customers of [Company Name] for a period of [X] years, particularly those with whom they had a direct business relationship during their employment.
Restrictive covenant clause with provision for non-compete based on employee's position
This version adjusts the non-compete based on the employee’s position.
The employee agrees that for [X] years following termination, they will not work in a competing business if their position is similar to the one they held at [Company Name], with particular emphasis on the skills and knowledge they gained during their tenure.
Restrictive covenant clause with provision for no solicitation of business opportunities
This clause restricts solicitation of business opportunities.
The employee agrees that for a period of [X] years following the termination of this Agreement, they will not solicit or pursue any business opportunities or contracts that were introduced to them by [Company Name] or its clients during their employment.
Restrictive covenant clause with provision for non-compete in specific product areas
This version restricts competition in specific product areas.
The employee agrees that, for a period of [X] years following termination, they will not engage in any business that competes with [Company Name] in the sale, development, or distribution of [specific product or service], within [insert region or market].
Restrictive covenant clause with provision for non-compete in related industries
This version expands the non-compete to related industries.
The employee agrees that for [X] years following the termination of this Agreement, they will not engage in any business activities in industries related to [Company Name]’s operations, including [list related industries], to prevent competition in areas closely tied to the company’s market.
Restrictive covenant clause with provision for prohibition on disclosing customer lists
This version specifically prohibits disclosing customer lists.
The employee agrees that for [X] years after termination, they will not use, disclose, or share any customer lists, client contacts, or business relationships with third parties, as such information is considered proprietary and confidential to [Company Name].
Restrictive covenant clause with provision for geographical limitations in a specific region
This version imposes specific geographic limitations.
The employee agrees that for [X] years following the termination of this Agreement, they will not engage in any competing business within [X] miles of [Company Name]’s offices or any other region in which the company has significant market presence, as outlined in this Agreement.
Restrictive covenant clause with provision for post-termination training obligations
This clause includes training obligations post-termination.
The employee agrees that, for [X] months following the termination of this Agreement, they will provide training and transition services to [Company Name] regarding client relationships, proprietary systems, or other duties as requested by the company to ensure smooth post-termination transitions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.