Example of Non Compete Clause in Employment Contract

24 June 2023

A non-compete clause is a provision in an employment contract that prohibits an employee from working for a competitor or starting a competing business for a certain period of time after leaving their current employer. The purpose of a non-compete clause is to protect the company’s business interests, trade secrets, and important clients.

An example of a non-compete clause in an employment contract would be as follows:

“During the term of this employment contract and for a period of two years following the termination of employment, Employee agrees not to engage in any business or activity that is in competition with or similar to the business of Employer within a radius of 50 miles from the current location of Employer. This restriction includes but is not limited to working for a competitor, soliciting or providing services to any current or former client of Employer, or owning or holding a financial interest in a competing business.”

This example clause serves to protect the employer’s business interests by preventing the employee from working for a competitor or starting a competing business within a certain geographic region for a period of time. It also prohibits the employee from soliciting or providing services to any clients of the employer, which helps to protect the company’s client base.

It’s important to note that non-compete clauses must be reasonable and proportional to the legitimate business interests of the employer. Courts may strike down overly restrictive non-compete clauses that are designed to limit an employee’s ability to work in a certain industry or geographic region without reasonable justification.

Employers should also ensure that employees receive adequate compensation or other valuable consideration in exchange for signing a non-compete agreement. This can include bonuses, access to trade secrets or confidential information, or other benefits.

In summary, a non-compete clause in an employment contract is a valuable tool for protecting the business interests of an employer. It’s important to ensure that the clause is reasonable and proportional to those interests and that employees receive appropriate compensation or consideration for signing the agreement.