Get It in Writing:
The IT Professional's Guide to Essential Contracts

Chapter 2: Contracts that Define Employment Relationships
Part 1: Examples of Employment Contracts
E: Non-Compete Agreement

This agreement can either be a standalone contract or a provision added to an employee contract. Non-compete contracts exist between you and your employee, and they require that your employee not use what they learned while working for you against you. Non-compete agreements usually stipulate that an employee won't work for competitors, steal your current clients, or compete with you for some period of time once they leave your company.

Non-compete contracts can be difficult to enforce if they're unreasonable. Here are some key considerations to keep in mind:

  1. Time Frame. Period of time the agreement can be enforced for after the employee leaves. A year is usually considered reasonable.
  2. Geographic Area. If your agreement covers too wide an area (e.g., the whole country), it can very easily be challenged if the employee takes their case to court.
  3. Types of Business Engagement. The viability of your contract depends on whether or not its provisions still allow an employee to earn a living with limited adverse effects on your business. If you prohibit a former employee from engaging in too many types of business, a court will likely deem the agreement unenforceable.

Check out SME Toolkit's sample non-compete agreement to see an example.


Next: Part 1F: Examples of Employment Contracts: Work for Hire Agreement

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