Non-compete clauses can be compared to a prenuptial agreement in a marriage. They can be seen as taboo and some potential employees are caught off guard when they are asked to sign one. But what are they, why do some employers prefer using them and how should a potential employee handle the situation if they are asked to sign one?
All of those questions will be answered below.
What Is a Non-Compete Clause?
The use of a non-compete clause has been on the rise over the past ten years. What was once used only for technicians, scientists and top executives is now being used for all new hires to sign.
Employers will use a non-compete clause to protect sensitive technologies, processes and other trade secrets and information. The more competitive the field the company is involved in, the more likely an employer is going to ask a prospective employee to sign a non-compete agreement. They do not want important employees to turn around and work for a competitor, or become a consultant or a freelancer in the same field.
Non-compete clauses can be a paragraph within an employment agreement or a separate document that a new employee must sign in order to be hired. They try to specify three key factors: the scope of the services, the roles and skills that can or cannot be used for a competitor, and the duration of the agreement. One year is a typical time constraint. These clauses must protect a legitimate business interest of the employer, such as a trade secret, customer relationships or confidential information.
As with any legal document, every non-compete agreement is going to be different. Therefore, the best advice for job seekers is to consult with a labour specialist such as Maurice Blackburn in Gold Coast. A fair document will attempt to balance an employee’s rights with the company’s rights in order to protect their investment in the employee. With that said, most agreements tend to favour the employer.
Should Potential Employees Sign a Non-Compete Agreement?
Potential employees should know that non-compete agreements are not able to be too constricting or they are not valid. In addition, know that you are able to negotiate the terms of the agreement, including the geographic scope of the agreement, the amount of time, names of specific competitors, and the effect if you are downsized or fired rather than if you quit. Potential employees should also negotiate potential raises or other perks for signing and complying with a non-compete agreement.
As a job seeker, a potential employee needs to take the time to consider whether they believe the non-compete agreement they are about to sign is fair. After all, it could outline whether they’re able to work for another company in the future, severely limiting their ability to obtain a job at another company in their line of work.
If you are someone who is currently employed by a company that made you sign an agreement such as this one but you’d like to switch to another company, make the new company aware of the agreement. They might be able to assist in helping you bypass the agreement you made with the other company. An attorney will be able to assist, too.