Why Recruitment Leaders Should Revisit Their Restrictive Covenants Now

Across the recruitment sector, we’re seeing a growing number of situations where restrictive covenants exist… but fail to provide the protection businesses expect.

On paper, most agencies have contracts in place.

In practice, the question is whether those contracts would actually stand up if tested.

For recruitment leaders, this presents a commercial risk.

When consultants leave and join competitors, the assumption is often that restrictive covenants will protect client relationships, candidate pipelines, and revenue.

But enforceability is not guaranteed.

Under UK law, restrictive covenants must go no further than reasonably necessary to protect legitimate business interests. Where they are too broad, outdated, or not tailored to the role, they may be difficult to enforce.

What we’re seeing more frequently is not the absence of covenants, but a mismatch between how recruitment businesses operate today and how their contracts are structured.

For example:

• Contracts that have not evolved as consultants are promoted or take on greater responsibility
• Standardised terms applied across very different roles and levels of seniority
• Restrictions that extend beyond the relationships an individual actually managed

Individually, these issues may seem minor.

Collectively, they can weaken a business’s position when it matters most.

The challenge is that these risks often only become visible at the point of exit.

A consultant resigns.

They join a competitor.

Clients begin to move.

At that stage, the focus shifts from what is written in the contract to whether it can realistically be relied upon.

For many recruitment businesses, this is a prompt to take a more proactive approach.

Reviewing whether restrictive covenants still reflect the structure of the business, the seniority of employees and the reality of client relationships can help reduce risk before issues arise.

Read the full breakdown

If you run a recruitment business and want to understand whether your restrictive covenants would actually protect you, recLAW has broken this down in more detail here.

We’ve also included a practical checklist to help you sense-check your current contracts.