Non compete agreement

Non compete agreement

A non compete agreement is common to employment contracts. But that does not always mean that we all understand what one truly is and the power that the clauses within one can hold. Non compete agreements can actually be very useful pieces of documentation, as long as they are understood and subsequently used correctly.

What is a non compete agreement?

A non compete agreement is a document that prevents what one party, often the employee of a company, can do when in employment at that company - and sometimes after. They can be highly restrictive and will often delineate what, when and who a person can or cannot work for after leaving a company. There is often a time frame included in this and will often be up to 12 months. It can also stop them from setting up their own company after leaving a firm that is within the same industry for a certain amount of time. Sometimes, a non compete agreement will also determine if an employee should be compensated for the time they cannot work for a competitor or for themselves after leaving their original employer. 

How does a non compete agreement work?

If a non compete agreement is structured and written well, it should be clear how a non compete works. Any quality non compete agreement template, that a company asks all future employees to sign, should detail with no room for confusion what happens if a person goes to work for a competitor or how they are to be compensated should they need to take a period of gardening leave. The agreement should also detail how the agreement becomes void and what circumstances trigger that. It should also outline the conditions on a person subject to a non compete agreement, after termination as opposed to resignation. 

Advantages of a non compete agreement 

There are many advantages to be had from a non compete agreement. Firstly, like all pieces of legal documentation, writing it down in black and white gives clear direction to both sides as to what is expected of them. That clarity can help strengthen the working relationship, but also help ensure that the agreement is abided by. 

That is further reinforced by the fact that agreement should outline clearly what will happen in the case there is a breach of the agreement. In the instance of the employee, they know what the legal ramifications could be should they break the non compete agreement. However, they also have the chance to negotiate the agreement beforehand so that they are happy with the terms and conditions involved. For, whilst the clauses in a non compete agreement are often restrictive, the employee still needs to ensure they are 100% happy to put their signature to such conditions. 

Ultimately, non compete agreements are good for companies as it helps protect their company specific data. By acting in full confidentiality, they are able to maintain their competitive edge in the industry they work as they can expect their employees to not take their insider secrets with them to another firm. 

Contractbook and non compete agreement

At Contractbook, we think that any agreement or contract that is well structured has the potential to be really powerful. The non compete agreement is a great example of that. It can help protect both a company’s and employee’s rights, so that what is left is a healthy, working relationship based on trust and respect.

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