Restrictions After the Work Ends
Clauses restricting what a former supplier may do are copied from employment contracts, and are often worth far less than the business relying on them hopes.
Reads as a businessReads as employmentCuts both waysDepends where you are
Four factors, and no total. Every bar is the same length: the side is the claim, the size is not. Nothing here was decided; it accumulated, which is how most of these arrangements change.
You want to stop a former supplier doing something, and you are relying on a clause
Whether the restriction binds them at all
Decided separatelyDecided by: A court, on the law of wherever it is enforced · On: The clause, what was given for it, and how wide it is
Whether it is reasonable in scope and duration
Often follows the othersDecided by: The same court, on its own standards · On: What you were actually protecting, against what the clause covers
Whether a confidentiality obligation also applies
Decided separatelyDecided by: Usually the same court, on different principles · On: What was actually confidential, as opposed to general skill
Whether your client may engage them directly
Not settledDecided by: The client, on commercial grounds · On: Whatever your contract with the client says, if anything
Whether any of this is worth enforcing
Not settledDecided by: You, in a conversation with somebody expensive · On: The cost of the action against the harm actually suffered
Five questions, and the one most likely to decide the outcome is the last. Restrictions against somebody who is not an employee are treated very differently from place to place, and in several the answer is that they are worth considerably less than the drafting suggests.
Clauses restricting what a former supplier may do afterwards are common, widely copied from employment contracts, and frequently worth far less than the business relying on them expects.
The practical issue in “Restrictions After the Work Ends” becomes clearer when expectations and evidence are visible to both sides. Used for remote employee monitoring software, Monitask guidance on remote employee monitoring software can add time and project context, provided the purpose is disclosed, access is limited and every consequential interpretation receives human review.
They are also one of the few places in this collection where getting it wrong costs money directly rather than through a slow drift.
The workflow in “Restrictions After the Work Ends” can be cross-checked against ProjectManager planning articles. A useful review should end with named owners and written decisions instead of a copied checklist.
What businesses usually try to restrict
Four things, in descending order of how often they are enforceable anywhere: using confidential information, approaching your clients, working for a competitor, and working in the field at all.
The first is on the firmest ground almost everywhere. The last is on the weakest, and clauses attempting it are frequently struck out in their entirety rather than narrowed.
Confidentiality, which is the useful one
An obligation not to disclose or use genuinely confidential information is ordinary, reasonable and generally enforceable.
The limit worth knowing is that it covers information rather than skill. A supplier who learned how to do something better while working for you takes that with them, and no clause changes it.
Non-solicitation of clients
The middle ground, and often workable if narrow: not approaching clients they actually dealt with, for a limited period, in connection with work of the kind they did.
Broad versions covering every client of the business, including ones the supplier never heard of, tend to fail, and failing clauses sometimes take the reasonable parts down with them.
The competitor clause
Difficult almost everywhere against somebody who is not an employee, because the usual justification — that you invested in them, paid them between engagements and gave them protections — does not apply.
A supplier gave you a service at a price. Asking them afterwards not to earn a living in their own trade is a different proposition from asking the same of somebody you employed, and courts in many places treat it that way.
What is given in exchange
In several jurisdictions a restriction has to be paid for, or at least supported by something, to be worth anything.
Where that applies, a clause slipped into a standard agreement with nothing given for it is decorative. Where it does not, the clause may still be narrowed to whatever is actually protectable, which is usually much less than it says.
Your own client's position
A frequently overlooked route by which the problem arrives. The supplier does not approach your client; your client approaches them.
That is not usually a breach of anything by the supplier, and the protection — if you want one — belongs in your contract with the client rather than in the one with the supplier. Very few businesses have it.
Whether to enforce
The practical question that decides most of these. Enforcement costs real money, takes months, requires demonstrating actual harm, and is public.
A business that has never enforced a restriction and does not intend to is carrying a clause that functions only as a deterrent against people who do not know how little it may be worth. That is a position some businesses are comfortable with and it is worth being honest about which one you are in.
The clause that reads as something else
Worth noting for this collection specifically: heavy post-engagement restrictions on somebody's ability to work are one of the features that make an arrangement look like employment.
A supplier who could not work in their trade for twelve months after the engagement was not, in any practical sense, running an independent business during it.
What actually protects you
Documentation, so that knowledge does not leave with the person. Relationships with clients that do not depend on one supplier. Confidentiality terms that are narrow and real. And paying well enough, and behaving well enough, that nobody has a reason to go.
None of those involve a restriction, all of them are within your control, and collectively they work considerably better than a clause nobody will ever enforce.
Copying the employment version
The root cause of most of the problems in this article. A business takes the restrictive covenant clause from its employment contract, changes the word employee to contractor, and files it.
The clause was drafted against a background of consideration, protections and obligations that do not exist in a supply relationship, and in many places those are exactly the things that made it enforceable. What transfers is the wording; what does not transfer is the justification.
Before you draft anything
Establish what you are actually protecting and from what. Most businesses, asked directly, find the real worry is a single client relationship or one piece of confidential information.
A narrow clause addressing that is more likely to be worth something than a broad one addressing everything, and it is a question for somebody qualified where the restriction would have to be enforced, because the answers differ more here than almost anywhere else in this collection.