Can a firm restrict my career options by limiting which companies I can apply to?

I'm on maternity leave from my job at a medium-sized company in a specific digital sector. Where I live there is a thriving but small digital hub with only a couple of other similar businesses that my job title directly transfers to.

After a run of employees leaving, it transpires that my work has set up agreements with local businesses so they will not employ our staff. This was all rumor, but now at least one person has been told directly their job application has been refused for this reason.

Many people have left lately because of a poor company culture, but which I hear is improving and its poor financial performance and industry reputation, which are yet to turn around.

My time away has made me appreciate the up and downsides but I had decided to return for at least the duration of 2016 to settle back into working life and to give things a chance to turn around - the company has been good to me. But my back-up plan was to apply to exactly the companies where this agreement is in place.

With a couple of months of maternity leave left, should I forget my original plan and start looking for another job before any other similar restrictions come into force? And can companies even restrict career options like this?

Jeremy says

Rather my surprise, it seems to be entirely within the law for companies to have reciprocal arrangements of this kind, as long as there's no discrimination on grounds of race, religion, age etc - though they clearly do restrict an individual's choice of employer. And I agree that such an arrangement suggests a serious lack of confidence as if the company doubts its ability to attract and retain able staff purely on merit.

But I still think you should stay with your original plan. To jump ship immediately after completing your maternity leave not only seems a little churlish but also denies you the chance to see for yourself if the long-awaited turnaround is materializing. I would very much doubt there will be further restrictions on your choice of employment.

Readers say

Check your maternity arrangements. If you have an enhanced package (SMP is not affected) then you may have to return to your company for three to six months or else pay it back. Starting in a new company is also pretty stressful, so returning to your old company might be a better way to get back into working life. I'd stick to your original plan and see what the atmosphere is like, and be ready to apply elsewhere if needs be.

Lots of firms have bits in contracts that say you cannot be poached to work directly for a rival, though usually this is time limited (six months in my experience), and also limited when the new company works in the same sector with the same clients.