Non Compete Agreement

A non-compete agreement refers to a clause in a contract agreement which restricts one party, usually the employee, from taking part in activities which are in competition with the employer or the party seeking to work with the employee. In some course, these are also referred to as restrictive covenants, since they restrict the employee to working with only a particular firm.

The reason why such an agreement would be necessary relates to the possibility of an employee using the information they gained in one firm to start a business of their own or start working for a competing firm. In such cases, the information they have could give them a competitive advantage. In addition to that, the employee can also exploit the confidential information that they were privy to when working in the initial company, which can lead to the company’s sabotage.

For this reason, the non-compete agreements are usually in force not only during one’s tenure in the company, but also after they leave the company either through retirement or other means. However, different companies might have different policies regarding how long the non-compete agreement will be in force.

For instance, there are some that will give a certain period of time after leaving the company during which the individual would still be bound by the non-compete agreement. The specific details making up the document usually depend on the nature of the company as well as the types of information the employee will be handling when working with the company.