When you start or leave a job, you may be asked by an employer to sign a non-compete agreement. This is a legal agreement that limits and prohibits the commercial activities you can do after you have finished with the company.
These agreements can affect your future career and so it is important for you to understand what they are and what to look out for when you are presented with one.
It is always worth it for you to consult a lawyer before signing a non-compete agreement. There are some key factors that you need to consider before signing one.
What Is It?
A non-compete agreement is a legal agreement that has within it post-employment rules that state whether an employee, consultant or contractor can enter into various other aspects of work. This is usually limited to companies that are in competition with the company that you are leaving.
Employers like to introduce this to employees when they are aware that the employee is heading away from the company. However, they can also be introduced at the beginning of your employment and have been found to be included as a condition of employment.
They often are presented as a single legal document or a clause within your employment contract. They can also be referred to as a no-poach agreement or a post-termination clause. Officially, they are there to protect both the employee and the employer.
As well as preventing you from competing with your former employer, they may also contain a specified amount of time during which you cannot work for a competitive, markets where you cannot operate, and the disclosure of trade secrets and intellectual property.
Why Are They Used?
These are not universal and often in employment law are found to be quite controversial. This has not stopped many companies from still using them though. This is particularly important when it comes to market information and intellectual property.
If a company is working in a competitive industry, then they will not want you to leave their company for a rival and give away all of their secrets or their plans for the future. These agreements tend to be used in sales and marketing roles so that you cannot poach previous clients.
What Are The Benefits?
Non-compete agreements have both advantages and disadvantages for both parties. Employers who are keen to tie you down may use them to keep you firmly in your role.
Keeping intellectual property and trade secrets within the company can keep your job secure and your innovations are protected from being leaked to the world.
However, you should still be wary when asked to sign one as it may mean that you are off of the job market for a while if you decide to leave.
These agreements can often be seen as just another box to be checked so that you can get a new job. However, they do have implications for the future and so need to be carefully considered before they are signed.