Employers can draft contracts that restrict the ability of an employee to contact clients or work in the industry following their departure. These “restrictive covenants” (or non-solicitation agreements) are thought to be generally unenforceable but that is not actually the case. A well drafted non-solicitation clause can prevent an employee from many forms of competition following their departure.
In situations where you are asked to sign or have signed a non-solicitation agreement or non-solicitation clause, consider the following advice:
First, does the contract form part of the employment relationship? This is critically important but often overlooked by employees and employers – and sometimes by inexperienced lawyers. As with an employment contract, an individual has to agree to a restrictive covenant (non-solicitation agreement) before he or she accepts employment.
Second, was any form of duress involved? Was the employee forced to sign the non-solicitation clause or otherwise threatened with losing his or her job? If the contract was not entered into freely and voluntarily, a court will set it aside.
Third, and not least, is the contract even reasonable? This is where most employers get it wrong. Unlike other forms of employment contracts, restrictive covenants have the potential to do significant harm to individuals, so courts have the power to overrule them where the restrictions imposed are unfair. So the clause must only limit an individual’s post-employment activities to the extent that is absolutely necessary. This is often assessed by considering the length of time the restriction applies, the geographic scope of the restriction and whether it is even necessary.
Fourth – why leave such an important contractual clause to chance? Too many individuals and companies don’t get good advice about these clauses. If you need to draft or are being asked to sign a non-compete or non-solicit call the experts at Whitten & Lublin Labour & Employment Lawyers. Our team of experienced lawyers have drafted, interpreted and challenged countless non-compete and non-solicitation clauses.
Read our employment law articles about Non-Solicitation Agreements for more information or read about non-solicitation agreements and clauses near you: