The non-compete or non-solicitation clause: Fair or not?
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Is there a non-compete clause in your employment contract? What does it mean and is it really applicable?
What is a non-compete clause?
The non-compete clause prevents you from working for one of your employer’s competitors or starting up your own business in a similar trade. It is applicable when your employer has reason to protect his business interests upon you leaving his company. Your leaving for another company, or starting your own could result in a loss of turnover and profit, which might pose a threat to the position of the remaining staff.
What is a non-solicitation clause?
A non-solicitation clause forbids you from contacting the clients that you worked with once you have resigned.
Can a non-compete clause be included in different kinds of contracts, permanent and temporary?
A non-compete clause is not valid in a temporary employment contract unless special circumstances apply, such as the ones mentioned above: loss of turnover, loss of profit and more legitimate business interests. These special circumstances should be explicitly specified in the employment contract.
There is not really a standard non-compete clause
Don’t compare your non-compete clause with someone else’s. This might give you the idea that you have more or fewer rights and that therefore the clause can be changed. Your employer can determine what to include in the non-compete clause. Also, it is important to check if it is still reasonable should you have had a change of position. It may contain provisions such as:
- The kind of work it applies to
- Restrictions on geographical areas
- Former employer's competitors
- An applicable time period, usually one or two years after resignation
- Possible penalties
There has been a lot of discussion about the validity of non-compete clauses
In order for a non-compete clause to be valid, the following requirements must be met:
- You agreed to it in writing; in the signed contract or you signed the terms and conditions in which it’s mentioned
- You are 18 years old or over
What happens if you fail to comply with the non-compete clause?
Although there are many discussions and doubts about how valid a non-compete clause is nowadays, your employer can still take you to court if he thinks that you have caused him damage. The court can give you a penalty and force you to comply with the clause. However, the court will also look at your interests and may sometimes decide that the clause is no longer applicable.
Fair or not?
Is your non-compete clause fair or not? Take another look at your contract; maybe this information will help you understand this commonly discussed clause.
Els Brouwer is the Executive Director of Projob Company Onboarding . She has been working with expats and international companies for over 20 years. See what Projob can do for you.