Restrictive Clauses In Employment Contracts – Navigating The Thorny Landscape For Employers


A covenant in restraint of trade is a clause in business agreements or employment contracts that restricts or limits a party’s ability to enter certain agreements. It is one in which a party covenants to restrict his future liberty to exercise his trade, business, or profession in such a manner and with such persons as he chooses.[1]

Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. Restrictive covenants include non-compete and non-solicitation agreements. A non-compete agreement is a promise in an employment contract not to engage in the same type of business for a stated time in the same market as the employer. A non-competition covenant requires an employee not to do a particular type of work, after leaving the employment.[2] On the other hand, a non-solicitation agreement is a promise in an employment contract to refrain, for a specified time, from either enticing other employees to leave the company or trying to lure customers away.[3]

Generally speaking, such a restraint is unenforceable because it would be contrary to the public policy of promoting trade and business, except where the restraint of trade is reasonable from the point of view of the parties and the public.


The Position of The Law on Restrictive Covenants in Nigeria

Currently, the pieces of legislation that regulate restrictive contracts are the Constitution of the Federal Republic of Nigeria, 1999, as amended, and the Federal Competition and Consumer Protection Act (FCCPA), 2019. The other source of regulation on this issue is case law, as the Courts in Nigeria have, over the years, made pronouncements on the legality or otherwise of restrictive clauses in employment contracts.

Under Nigerian legal jurisprudence, the general position of law is that an employer cannot protect itself from competition by a former employee or from the employee’s exercise of his skill, simply because such skill was acquired when the employee was in their employment.

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[1] Suit No: NICN/LA/169/2015- Iroko Limited V. Michael Ugwu available at
[2] Bryan A. Garner: Blacks Law Dictionary, Tenth Edition
[3] See 1 (supra)