Non-compete Agreement

Introduction to UK Noncompete Agreement

Introduction to Non-compete Agreement

A non-compete agreement sets post-employment, employment, and work restrictions on an employee. Non-compete agreements are aimed at safeguarding the employer’s trade and financial interests, including intellectual property rights, and trade secrets. Under Employment Law, These agreements also restrict former employees from springboarding i.e. setting up the same business, within the same geographical area and pouching the clients and existing employees of the former employer.

What is a non-compete Agreement?

It is an agreement between an employer and an employee that imposes post-employment restrictions on the employee. Employers can agree on a separate non-competing contract with the employee or insert non-competing sections and clauses in the Employment contract. The clause imposes post-employment restrictions on former employees from working for competitors or defined groups of competitors for a specified period of time. It covers things such as:

  • Trade connection
  • Trade secret and confidential information
  • Stability of the workforce
Non-compete Agreement

The Benefit to the Employer

  • The benefit to the employer is by providing them with:

    • Greater assurance that the company’s intellectual property (IP),
    • Confidential resources,
    • Proprietary information will not be made available to or used by a competitor.

Limitation

Under Employment Law, The non-competition agreement could not be used in the following:

  • Low-wage workers.
  • The clause is valid for 5 years or less for the sale of a business; or
  • 2 years for employment contracts limitation.

Limitation other than non-compete clauses

There are other methods to restrict a formal employee other than having a non-compete clause; such as:

  • Legal agreements not to solicit clients
  • Confidentiality agreement

Inevitable disclosure doctrine: arises after an employee who is not bound by a non-compete agreement joins a competitor. The former employer may assert that there is an implied non-compete because the former employee will unavoidably disclose sensitive information.

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Disclaimer​

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legallex does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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