Latest Posts

Buying a Business or Tendering to Provide a Service? Don’t Get Caught Out by TUPE.

This article was published in the November/December 2025 edition of London Business Matters.

When buying a business or taking over a service, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’) is a key consideration. TUPE applies to all relevant transfers regardless of workforce size and importantly, cannot be contracted out of. TUPE protects employees from losing their jobs by automatically transferring their employment to the buyer on existing terms and liabilities.

Which employees transfer?

All employees ‘assigned’ to the business/service will automatically transfer. The assessment is rarely straightforward, particularly where roles are divided across clients or activities. While the percentage of time spent on the relevant work is a starting point, the law also considers contractual arrangements, job description, cost allocation and economics value.

ETO reasons and dismissals

Dismissals connected with the transfer are automatically unfair unless the employer can show an ‘economic, technical or organisational’ (ETO) reason ‘entailing changes in the workforce.’ Tribunals interpret ETO reasons narrowly however, genuine redundancies arising from a reduction in demand, technological change or efficiency-driven restructuring may fall within scope, provided they are also procedurally fair.

Restrictions on ‘harmonising’ terms

A buyer is unable to ‘harmonise’ terms and conditions of transferring staff with its existing workforce if the sole or principle reason is the transfer. This prohibition is not time-limited so that attempts, even years later, can be unlawful exposing the buyer to breach of contract or constructive dismissal claims. Even with a genuine ETO justification, the buyer must still obtain employees’ agreement.

Duty to inform and consult

Employees must be informed of the transfer and also any ‘measures.’ ‘Measures’ is construed widely and can include redundancies, relocations, changes to working practices or payroll. Where ‘measures’ are proposed, consultation is also required. Any procedural failures in this regard can result in protective awards of up to 13 weeks’ gross pay per affected employee.

Employee liability information (ELI)

The seller must provide specified ELI on transferring employees. Prudent buyers should carefully analyse this information as early as possible to understand the risks of assuming equal pay liabilities, enhanced redundancy rights or long-term sickness absences.

Conclusion

TUPE considerations require early legal advice and forensic due diligence. If considered late in the process, it can result in a lost opportunity to negotiate important indemnities leaving the buyer with liabilities which may outweigh the value of the deal itself.

Read More

Restrictive Covenants: How Employers Can Protect Their Business Interests

In a competitive market the departure of a key employee can put a company’s most valuable information and assets at risk. From confidential material to trusted client relationships, the loss can be significant, and in some cases, irreversible.

Restrictive covenants remain one of the most effective contractual damage limitation tools. However, the law is applied strictly; a clause will only be enforceable if it is reasonable, proportionate, tailored to the individual, and justified by genuine business requirements. With anticipated legislative changes, now is the time for employers to review and strengthen these protections.

What Are Restrictive Covenants?

A restrictive covenant is a contractual term limiting certain activities by the employee after employment ends. Only a narrow range of interests can be legitimately protected, including client connections, confidential information, trade secrets and workforce stability.

The purpose is not to block fair competition, but to prevent unfair advantage gained through access to the employer’s resources and relationships. This distinction matters – restrictions with no clear link to a legitimate business interest are unlikely to be enforceable. If a clause exists solely to prevent a former employee from working elsewhere, it will almost certainly fail.

Restrictive covenants are part of a broader toolkit for protecting business interests. Other measures, such as intellectual property clauses, clear policies on data security, and exit interviews, complement these contractual protections.

Main Types of Post-Termination Restrictions

1. Non-compete: prevents the employee from working for a competitor or starting a competing business for a defined period. These are the most difficult type of restriction to enforce and face the highest judicial scrutiny.
2. Non-solicitation: prevents the employee from approaching the organisation’s customers, clients or suppliers after they leave.
3. Non-dealing: prevents the ex-employee from working with your clients, even if the client initiates contact.
4. Non-poaching: prohibits the employee from enticing or encouraging current staff to join them in a new venture or competing business.

Confidentiality obligations apply both during and after employment, operating alongside post termination restrictions. They can be a stronger legal foundation because they are not subject to the same time limits. However, once employment ends, only trade secrets remain automatically protected, so an express confidentiality clause is needed to cover wider information.

In practice, businesses often combine different restrictions. For example, a senior sales executive may be a subject to a non-compete clause of limited duration, a non-solicitation clause covering key clients, and ongoing confidentiality obligations. Layering protections in this way improves enforceability and provides flexibility in the event that one of the clauses is challenged in court.

Are They Enforceable?

To be enforceable, a restrictive covenant must be reasonable in scope, duration and geography. There is no “one size fits all” approach. For example, a restriction suitable for a sales director may not be justified for a junior manager, even if they both work in the same department.

The restrictive covenant must go no further than is necessary to protect the specific commercial interest, such as safeguarding client relationships or protecting confidential know-how. It’s also important to bear in mind that enforceability is assessed at the time the covenant was agreed, not when the employee leaves. Therefore, it is important for employers to review and update restrictions after promotions or significant changes in role.

If a clause is found to be too broad, for example, covering clients the employee never dealt with or applying to an unreasonably wide geographical area, or lasting longer than necessary, a court may strike it out entirely rather than rewrite it.

Each covenant should therefore be tailored to the employee’s actual responsibilities and supported by a clear, evidence-based justification for its terms.

Anticipated Legal Changes

The government has proposed a statutory cap of three months on non-compete clauses in employment contracts. While not yet implemented, this change would require employers to place greater emphasis on the other types of restrictions, such as non-solicitation and garden leave provisions to maintain protection. Garden leave is a period during an employee’s notice when they remain employed and continue to receive salary and benefits, but are typically not required to attend the workplace and are often restricted from performing their normal duties, engaging with clients, customers or colleagues, or starting new employment with a competitor. 

The courts are also continuing to reinforce the importance of up to date, role specific drafting, particularly after promotions or internal restructures.

Why Should Businesses Review Existing Restrictions?

With legal reforms pending and enforceability challenges increasing, businesses are recommended to review existing clauses as an opportunity to:

• Identify gaps and areas of risk, particularly following promotions or change in job roles of individuals;
• Review too wide geographical areas or definitions and provisions that will stand up to scrutiny; and
• Ensure that all documentation reflects the employee’s current role and responsibilities, reducing the risk of disputes and strengthening enforceability in court.

The aim is not to exclude employees from the market indefinitely, but to preserve the core relationships, information and goodwill on which businesses rely.

To discuss the contents of this article, please contact our Employment team via the form below.

Read More

Protecting Your Business: Are Your Restrictive Covenants Likely to Stand Up in Court?

This article was published in the September/October 2025 edition of London Business Matters.

An employee leaves your employment. Within two weeks, they’re sitting at a competitor’s desk, calling your best clients, armed with your pricing strategy and inside knowledge of your company. You might think your ‘iron-clad’ contract will stop them. However, unless your restrictive covenants have been thought through carefully and well drafted, you could find they’re not worth the paper they’re printed on.

Clauses such as non-compete, non-solicitation and event confidentiality terms protecting specific information after employment ends, can be vital in protecting your client relationships, know-how, and commercial strategy.

Restrictive Covenants are generally considered anti-competitive, and the law aims to balance the right to protect your business with an employee’s right to earn a living; only clauses that go no further than are ‘necessary’ will be enforceable.

What will a court look at?

1. Legitimate business interests. The restriction must protect something genuinely valuable to your business, such as trade secrets, client connections, or workforce stability. Preventing competition for its own sake will not pass the test.
2. Reasonableness of scope. Restrictions must be proportionate in terms of duration and geography.
3. Tailored to the activity. Senior executives may warrant broader restrictions than junior staff. Generic ‘cut and paste’ clauses will often fail to persuade a court legitimate business interests that need protecting.

Common pitfalls

All too often, businesses rely on template documentation or blanket clauses that try to cover every eventuality. Overreach is dangerous; if even part of the covenant is too wide, the entire clause can be struck out.

Practical steps

• Be precise and define the information you are seeking to protect: name companies or the nature of a business which is competitive or territories which you wish to protect rather than using vague, sweeping terms.
• Audit at key stages: review restrictions when roles change or when broader access to business information is given.
• Consider garden leave: keeping a departing employee out of the market during their notice period can buy valuable time.
• Move fast: if you suspect a breach, prompt action is vital in demonstrating to a court the risks your business faces.

Properly drafted and well considered restrictive covenants are key in protecting business interests. Not giving them the time and respect they deserve will only see hard earned business advantages slip away to competitors.

To discuss the contents of this article, please contact Dipti Shah via the form below.

Read More