NG Appeal Court Rules Against Restrictive Clauses in Employment Contracts

• The Court of Appeal in Lagos Division has ruled that employers cannot enforce unreasonable post-employment restrictive covenants.
• Employers must ensure that any restrictions on former employees are reasonable and necessary for business protection.
• Unreasonable restrictive covenants will not be enforced, promoting fair competition in the labor market.
• Employers should review and revise their employment contracts to comply with the latest court rulings.

The court reaffirmed the principle that employers must ensure that any restrictions on former employees are reasonable and necessary for business protection.

The Court of Appeal in Lagos Division has delivered a landmark judgment that employers cannot enforce unreasonable post-employment restrictive covenants to prevent former employees from earning a living. The court's decision was made in response to an appeal by an employer seeking to enforce such clauses in employment contracts. In its ruling, the court reaffirmed the principle that employers must ensure that any restrictions on former employees are reasonable and necessary for business protection. This means that employers cannot use restrictive covenants as a means of stifling competition or preventing ex-employees from earning a living.

The judgment is significant in the context of employment law in Nigeria, where post-employment restrictions have been a contentious issue. The court's decision is consistent with previous rulings on the matter, which have emphasized the need for employers to strike a balance between protecting their business interests and respecting the rights of former employees. The Court of Appeal has now reinforced this principle, making it clear that unreasonable restrictive covenants will not be enforced. This ruling is expected to have far-reaching implications for employers and employment lawyers in Nigeria.

The judgment has important implications for employers and employees alike. For employers, it means that they must review and revise their employment contracts to ensure that any post-employment restrictions are reasonable and compliant with the latest court rulings. Failure to do so could lead to disputes and reputational damage. For employees, the ruling provides greater protection against unfair treatment by employers seeking to restrict their ability to earn a living after leaving their employment. The judgment is also expected to promote fair competition in the labor market, as employees are free to seek new opportunities without fear of being restricted by unreasonable covenants.

Lawyers advising clients on employment contracts should review and revise any post-employment restrictive covenants to ensure they are reasonable and compliant with the latest court rulings, to avoid potential disputes and reputational damage.

Source: Original reporting via The