HR Glossary

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.

what-is-restrictive-covenant

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

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