Legal Due Diligence · glossary

Restrictive covenants

Promises that limit what a person may do after leaving, such as a non-compete or a promise not to approach customers or colleagues. Sunrise's two key people had only a six-month ban on poaching colleagues. Chapter 9

Explained in Chapter 9, People and Incentives, of Legal Due Diligence.

The main page for this term is Restrictive covenant, in Employment Contracts.

How it comes up, in Chapter 9
Promises called restrictive covenants limit what a person may do after leaving. The usual ones are a non-compete, a promise not to join or start a rival, and a non-solicitation, a promise not to approach customers or colleagues. These two contracts hold only a six-month ban on poaching colleagues. Either person could join a rival a month after resigning, and deal with the Group's customers from the first day.
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