This post by recLAW is part of our blog series, “The One Thing Recruitment Leaders Should Change Right Now”.
Growth is the goal for most recruitment businesses. More consultants, bigger clients, new divisions and stronger revenues are all signs that an agency is moving in the right direction. However, while recruitment businesses often evolve quickly, employment contracts and restrictive covenants are regularly left behind.
One of the most common things we see at recLAW is recruitment businesses relying on contracts that were drafted years earlier, often when the structure of the business looked very different. A consultant who joined as a trainee may now be managing a team. A billing manager may now oversee an entire division. Senior employees may have far greater access to client relationships, commercial strategy and sensitive information than they did when they originally signed their contract.
Despite this, many businesses are still relying on restrictive covenants that no longer properly reflect the individual’s role within the company.
Growth Changes Roles Quickly
Recruitment businesses rarely stand still. Teams evolve, billing structures change and responsibilities expand over time. As agencies scale, employees often gain greater influence within the business, stronger client relationships and access to commercially sensitive information.
The challenge is that restrictive covenants are not a “one size fits all” exercise. The restrictions that may have been appropriate for a junior consultant three years ago may not accurately reflect the position of that same individual after progressing into management or leadership.
That does not necessarily mean existing covenants are unenforceable, but it does highlight why regular reviews are important as businesses grow. Restrictive covenants should not simply be viewed as documents that are signed once and forgotten about. They should evolve alongside the business itself.
Why Regular Reviews Matter
The recruitment businesses that tend to manage this best are usually the ones reviewing contracts at key stages of growth. This may include promotions into leadership roles, expansion into new sectors, restructuring teams or changes to responsibilities across the business.
Importantly, this is not about creating unnecessarily aggressive contracts or making employment relationships more difficult. It is about ensuring agreements remain commercially sensible, relevant and appropriate for the role someone is actually carrying out.
Strong contractual foundations also help create clarity across the business. Employees understand the expectations placed upon them, leadership teams understand the protections available to the business and potential disputes become far easier to navigate professionally if they ever arise.
We recently explored this further in our article, “Your Recruiter Just Resigned. Are Your Restrictive Covenants in Recruitment Actually Enforceable?”, which looks at some of the common issues recruitment businesses face when trying to rely on outdated restrictions.
Strong Foundations Support Long-Term Growth
In a market where movement between businesses remains common, recruitment leaders should be thinking proactively rather than reactively. Too often, contracts are only revisited once a resignation has already happened and tensions are already high. By that stage, businesses are trying to solve problems under pressure rather than putting themselves in the strongest position beforehand.
If your business is reviewing its restrictive covenants or wider employment contracts as part of its growth plans, recLAW provides specialist legal support to recruitment businesses across every stage of growth.
