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What is a restrictive covenant in an employment contract?

Some employers require employees to sign contracts when they begin working. Others might do this when a person is promoted.

In other words, there’s nothing unusual about being asked to sign an employment contract, but you still need to be cautious — these contracts often have many different clauses and terms that can trap the unwary, especially when it comes to restrictive covenants. 

What are restrictive covenants?

Restrictive covenants include non-disclosure, non-compete, and non-solicitation clauses. Some employees might wonder if these are legal and binding. The short answer is that they usually are as long as they are reasonable. 

Why do employers include these clauses in employment contracts?

Employers have to do what they can to protect their business. By adding these clauses into employment contracts, they are working to ensure that people they entrust with information related to the business, including trade secrets, don’t use the information to harm the company. 

One thing to remember about these restrictive covenants is that employers may go to great lengths to ensure they’re honored. It’s possible that the company will take legal action against you if you breach your contract. Oftentimes, breach of employment contract claims come after the employee has left the company. These claims can be costly for both sides, but you should be prepared for the possibility.

Can you get help with an employment contract?

Employees should ensure that they fully understand the terms of an employment contract. It’s best to ask questions and get clarifications prior to signing the agreement. If you have questions after you’ve signed or if you need to know how to uphold your legal rights, you should ensure that you find those out quickly. 


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