Former employees should be stopped from setting up within five miles of their old salon, the NHBF says

Restrictive covenants should be tightened up to prevent an employee from setting up a rival business within five miles of their previous employer for at least six months, the NHBF has said.

Currently, so-called “non-compete clauses” or restrictive covenants within a contract normally only prevent a stylist, barber or therapist from setting up within half a mile of their former employer for six months after they have left the business.

The call by the NHBF was made within a government “call for evidence” looking at whether non-compete clauses should be banned from employment contracts because they stifle entrepreneurship.

But the NHBF in its evidence argued that in service industries such as hairdressing, barbering or beauty, the relationship with clients is a key part of running a successful business. Allowing too much freedom for former employees to set up a new business on their doorstep, or to work for a nearby business competitor and poaching clients can be potentially devastating for an otherwise successful salon or barbershop.

The Federation has argued that restrictive covenants generally do not go far enough and also criticised the current legal system.

NHBF president, Agnes Leonard said:

“Typically the clauses are limited to six months after employment ends and to a radius of half a mile, because that’s what the courts consider ‘reasonable’. We feel a radius of five miles would be more appropriate.”

“Our experience shows that it is too difficult for employers to get an injunction. It’s expensive and slow, and the interpretation of ‘reasonable’ restrictions is too narrow,” added NHBF chief executive, Hilary Hall .

The call for evidence runs until 19 July after which a formal consultation process is expected to take place.