Non-Compete Agreement

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What a non-compete agreement is and why it matters

A non-compete agreement, or non-compete clause, restricts a person from working for a competitor or setting up a competing business for a defined time and within a defined scope after their role ends. It is one type of restrictive covenant, alongside clauses that protect clients, suppliers or staff. Its enforceability depends heavily on local law.

Its purpose is to protect legitimate business interests, such as confidential information and client relationships, after someone leaves. For the employer it guards against immediate competitive harm; for the employee it limits their freedom for a period, so fairness and proportionality matter, and many jurisdictions limit or scrutinise these clauses closely.

When a non-compete agreement is used

• For roles with access to sensitive information or key relationships.
• When protecting confidential information after employment ends.
• To guard client, supplier or staff relationships for a defined period.
• As part of an employment contract or a separate agreement.
• Where local law permits reasonable, proportionate restrictions.

What a clear non-compete agreement includes

• The names of the parties and the role the restriction relates to.
• A clear description of the activities that are restricted.
• The geographic area the restriction covers.
• The duration of the restriction after the role ends.
• The legitimate business interest the restriction protects.
• Any related restrictions on clients, suppliers or staff.
• When the restriction begins and any conditions attached.
• How the clause is governed and how disputes are handled.

Common mistakes to avoid

• Drafting restrictions wider than needed to protect a genuine interest.
• Ignoring local law, which may limit or refuse to enforce such clauses.
• Leaving the scope, area or duration vague or unreasonable.
• Applying the same restriction to every role regardless of access.
• Failing to identify the legitimate interest being protected.
• Assuming a clause is enforceable without checking the relevant jurisdiction.

Best practices

• Tailor the scope, area and duration to what is genuinely necessary.
• Identify clearly the legitimate interest the restriction protects.
• Check local law, as enforceability varies significantly by country.
• Keep restrictions proportionate so they are fair and more likely to hold.
• Export the signed agreement to PDF so the agreed terms are fixed and shareable.