Non-Competition and Non-Solicitation Agreements

Employees often sign contracts containing non-competition and/or non-solicitation provisions. But what do they mean and are they enforceable?

A non-competition agreement will attempt to prevent an employee from competing with the employer after their employment relationship ends. This provision is normally drafted to include working for a company that competes with the employer.

A non-solicitation agreement will attempt to prevent an employee from soliciting the employer’s customers or employees after their employment relationship ends. This provision is normally drafted to include non-solicitation on behalf of a new employer.

These agreements are viewed by the Courts as being in restraint of trade and are therefore assumed at the outset to be unenforceable unless reasonably necessary to the parties’ interests at the time of agreement. Non-competition agreements are only enforceable in limited circumstances. Often Courts will refuse to enforce them when a non-solicitation agreement would have been sufficient to protect an employer’s interest. Non-solicitation agreements will not be enforced if they are not reasonable in terms of time and geographic scope or if they are ambiguous.

If you are leaving your employment to start your own business or are going to be employed by another company or receive a warning letter from your former employer advising you that you may not compete or solicit customers or employees you should obtain advice from an employment lawyer about your rights and obligations.