Non Compete Severance Agreement Template for England and Wales

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Key Requirements PROMPT example:

Non Compete Severance Agreement

"I need a Non Compete Severance Agreement for our departing CTO who has extensive knowledge of our proprietary technology and client relationships, with a 12-month restriction period and staged severance payments starting from March 2025. The agreement should cover the UK market with particular focus on London and Manchester regions."

Document background
A Non Compete Severance Agreement is commonly used in England and Wales when an employer wishes to protect its business interests following an employee's departure. This document is particularly relevant for employees with access to sensitive information, key client relationships, or specialized knowledge. The agreement combines severance compensation with restrictive covenants, typically including non-competition, non-solicitation, and confidentiality provisions. It must comply with UK employment law principles regarding reasonableness and consideration for restrictions. The agreement is crucial for managing risk in senior-level departures and protecting intellectual property, trade secrets, and customer relationships.
Suggested Sections

1. Parties: Identification and details of the employer and employee

2. Background: Context of employment relationship and reason for separation

3. Definitions: Key terms used throughout the agreement including Restricted Business, Restricted Period, Territory

4. Severance Payment: Details of compensation amount, payment schedule, and tax treatment

5. Non-Compete Obligations: Specific restrictions on future employment and business activities

6. Duration and Geographic Scope: Time period and territorial limits of restrictions

7. Confidentiality: Ongoing obligations regarding company information and trade secrets

8. Governing Law: Specification that the agreement is governed by the laws of England and Wales

Optional Sections

1. Garden Leave: Terms and conditions of any garden leave period prior to termination

2. Return of Property: Process and timeline for returning company assets and documents

3. Reference: Terms of employment references and agreed wording if applicable

4. Outplacement Support: Details of career transition assistance and support services

5. Non-Solicitation: Additional restrictions on soliciting employees, customers, or suppliers

Suggested Schedules

1. Schedule 1 - Restricted Activities: Detailed list of prohibited business activities and competitors

2. Schedule 2 - Restricted Territory: Geographic areas where non-compete restrictions apply

3. Schedule 3 - Payment Schedule: Breakdown of severance payments, timing, and tax treatment

4. Appendix A - Confidential Information: Categories of protected information and trade secrets

5. Appendix B - Company Property: List of company assets and documents to be returned

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Industries

Employment Rights Act 1996: Primary UK legislation governing employment rights and obligations, providing framework for employment contracts and termination

Common Law - Restraint of Trade: Legal principles established through case law that govern the enforceability of restrictive covenants and non-compete clauses

Competition Act 1998: Legislation governing competition law and anti-competitive practices in the UK

Trade Secrets Regulations 2018: Regulations protecting confidential business information and trade secrets, relevant for non-compete provisions

UK GDPR: Data protection legislation governing the processing and handling of personal data in post-Brexit UK

Data Protection Act 2018: UK's implementation of data protection standards, working alongside UK GDPR

Income Tax Act 2007: Primary legislation governing the taxation of income, including treatment of severance payments

Taxation of Chargeable Gains Act 1992: Legislation governing taxation of capital gains, relevant for certain types of compensation packages

Contract Law Principles: Fundamental legal principles governing contract formation, including clarity, consideration, and enforceability

Restrictive Covenant Requirements: Legal requirements that restrictive covenants must be reasonable in scope, duration, and geographic area, and protect legitimate business interests

Consideration Doctrine: Legal requirement that new consideration must be provided for post-employment restrictions and adequate severance compensation

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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