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Non-Compete Clauses and Post-Termination Restrictions in Hong Kong: Are They Enforceable?
Updated: Aug 21
Author: Kelly Leung, Associate Solicitor
When a key employee leaves a business, employers often worry about more than simply filling a vacancy. They may be concerned about losing clients, confidential information, trade secrets, and even other employees who could follow the departing individual to a competitor.
To mitigate these risks, employers often rely on restrictive covenants. Some restrictions apply during employment, while others continue after employment ends as post-termination restrictive covenants. This article focuses on the latter and examines when they may be enforceable in Hong Kong.
These provisions, referred to as restrictive covenants, are designed to protect legitimate business interests after an employee's employment ends. They can include limitations on competition, disclosure, solicitation, and more.
However, restrictive covenants are not automatically enforceable in Hong Kong. Courts will scrutinise these clauses carefully and will only enforce restrictions that are reasonable and necessary to protect a legitimate business interest. For a more detailed discussion of restrictive covenants and their enforceability in Hong Kong, please see our article, "Unveiling Restrictive Covenants: Enforceable Protections or Paper Tigers?".
Restriction | Purpose | Typical Enforceability |
Non-Compete | Prevents competitive employment | Subject to greatest scrutiny |
Non-Solicitation | Prevents poaching of clients or employees | Often easier to justify |
Non-Dealing | Prevents business dealings with specified clients | Can be enforceable if carefully drafted |
Confidentiality | Protects sensitive information | Often the easiest to enforce |
However, a recent decision handed down by the Court of First Instance in Marsh (Hong Kong) Ltd v Rohan Bhappu & Others [2026] HKCFI 1211 is notable for the Court’s seeming willingness to enforce unusually long restrictive covenants.
This article will review the factual circumstances of the case and consider any important takeaways for employers and employees alike.
Restrictive Covenants During Employment vs Post-Termination Restrictions
First, it is important to distinguish between restrictions that apply during employment and those that continue after employment ends. During employment, employees are generally subject to duties of fidelity, good faith and confidentiality, which may prevent them from competing with their employer.
Post-termination restrictions, however, operate after the employment relationship has ended and are therefore subject to much greater scrutiny by the courts. This article focuses on post-termination restrictive covenants, including non-compete, non-solicitation and non-dealing restrictions.
Recent Hong Kong Court Decision: Marsh (Hong Kong) Ltd v Rohan Bhappu & Others
The four defendants in this case were former senior employees of Marsh, an insurance broker in Hong Kong. Each had resigned and later joined Howden, a competitor of Marsh, in similarly senior roles. However, their employment agreements contained post termination restrictive covenants which bound them for 12 months, preventing them from soliciting or dealing with any of Marsh’s clients, and preventing them from soliciting any of Marsh’s employees.
The generally established position in Hong Kong law is that post termination restrictions lasting longer than 6 months will require the employer to provide "specific and cogent" evidence justifying the need for such a restriction with reference to their legitimate business interests.
Key Lessons for Employers and Employees
Importantly, however, the court’s decision at this stage only signalled that there was a "serious issue to be tried", not that the restrictions in their current form and duration were necessarily reasonable or enforceable.
Without specific examination of any evidence adduced by Marsh as to why the 12-month restraint is necessary to protect its legitimate business interest, nor any analysis of each employee’s individual circumstances, it is highly unlikely that this decision should be treated as meaningful precedent at this stage.
Nevertheless, there are several practical takeaways that may be useful for employers to keep in mind when drafting restrictive covenants in the future:
Employers should draft specific post termination restrictive covenants tailored to each employee. Senior employees with significant client influence and access to confidential information may warrant broader protection than a junior employee.
Restrictions on duration, geography and activities should go no further than reasonably necessary, and should be reviewed regularly, especially when employees are promoted or assume more sensitive responsibilities.
Evidence of client solicitation, employee recruitment, or misuse of confidential information can strengthen an employer's position considerably. Ongoing monitoring and information gathering is critical.
How Ravenscroft & Schmierer Can Help with Restrictive Covenant Disputes?
Restrictive covenant disputes can have serious commercial consequences. Whether you are seeking to protect client relationships, prevent employee poaching, safeguard confidential information, or enforce a non-compete clause, obtaining timely legal advice is essential.
If you are unsure whether your restrictive covenants are enforceable, concerned about a departing employee joining a competitor, or need urgent advice regarding client solicitation or confidential information, contact us today.
FAQ: Non-Compete Clauses and Restrictive Covenants in Hong Kong
What are non-compete clauses in Hong Kong?
Non-compete clauses are contractual provisions that restrict an employee from working for a competing business or carrying on a competing activity for a specified period after employment ends.
Are non-compete clauses enforceable in Hong Kong?
Yes. Hong Kong courts may enforce non-compete clauses where they are reasonable and necessary to protect legitimate business interests such as confidential information, trade secrets, and client relationships.
What are post-termination restrictions?
Post-termination restrictions are contractual obligations that continue after employment ends, including non-compete, non-solicitation, non-dealing, and confidentiality obligations.
What is a restrictive covenant in a Hong Kong employment contract?
A restrictive covenant is a contractual provision intended to protect an employer's legitimate business interests by restricting certain activities after employment has ended.
How long can a non-compete clause last in Hong Kong?
There is no fixed maximum duration. Courts assess whether the restriction is reasonable based on the employee's role, responsibilities, and the interests being protected.
Are non-solicitation clauses easier to enforce than non-compete clauses?
Generally, yes. Courts are often more willing to uphold restrictions on client and employee solicitation than broad restrictions on future employment.
Can employers stop former employees from contacting clients?
Potentially. A carefully drafted non-solicitation or non-dealing clause may prevent a former employee from approaching or conducting business with specified clients.
Are restrictive covenants enforceable against senior employees?
Courts are generally more willing to enforce restrictive covenants against senior employees who possess significant influence, client relationships, or access to confidential business information.
Can employers obtain an injunction to enforce restrictive covenants?
Yes. Hong Kong courts may grant injunctions where there is evidence of a breach of restrictive covenants or misuse of confidential information.
Why should restrictive covenants be reviewed regularly?
Restrictive covenants should be reviewed whenever an employee's role changes to ensure the restrictions remain reasonable, proportionate, and capable of enforcement.
How can Ravenscroft & Schmierer help with non-compete clause disputes?
Ravenscroft & Schmierer advises employers and employees on non-compete clauses, restrictive covenants, post-termination restrictions, injunctions, and employment disputes in Hong Kong. Contact us to discuss your situation.
Disclaimer: Whilst every effort has been made to ensure the accuracy of this article it is general in nature and does not constitute legal advice of any kind. You should seek your own personal legal advice before taking legal action. We accept no liability whatsoever for loss arising out of the use or misuse of this article.
For specific advice about your situation, please contact:
Associate Solicitor
+852 2388 3899