Everything You Should Know About a Non-Compete Agreement

June 16, 2022 | 3 minutes read
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What is a Non-Compete Agreement?

Sometimes termed as a non-compete clause, the non-compete agreement is usually for the employees working in a company. It prohibits them to work for a rival firm for a specific period of time and eventually become a competitor of the company they are presently working in.    

What is its purpose?

When an employee or a service provider signs the non-compete agreement, he gets legally bound from competing with the employer or working in a competitor firm for some period of time even after the employment ceases. This agreement also makes sure that any trade secrets learned during the employment are not revealed by the employee.  

Pros & Cons of a Non-Compete Agreement to the Employer

A non-compete agreement hands over an essential power to the employer in this era of fast growing industrialization and globalization. Here’s how the employer benefits from the agreement: Might reduce employee turnover: Companies with non-compete agreements may be a good fit with workers who have a lesser desire to change jobs. Keeps company's trade secrets safe: Noncompete agreements can prevent employees from taking sensitive information to a competitor. Enable an employer to invest in costly employee training: The chance is reduced of an employee taking the skills learned from costly training and taking them to another company. While the non-compete agreement has its advantages, the disadvantages are equally bothersome. A non-compete adversely affects the workforce, preventing the employees/freelancers from exploring their potential and utilizing their skills to the maximum. This can result in their leaving the company and the field entirely and taking their expertise with them. May cause a worker to leave a field entirely, taking their expertise with them. Also, they are often hesitant in signing the agreement because it limits their bargaining power. They are usually asked to sign the agreement after they have joined the workplace and have let go of other opportunities, which leaves little room for them to negotiate.  

What Does a Non-Compete Agreement Cover?

It is a written contract which addresses the employer’s concern about possible competition, in case the employee chooses to leave the organization. It remains in action for a certain period of time after the end of the employment. The agreement covers the following areas, but isn’t just limited to these: Trade secrets Innovative ideas Business practices that are trademarked Client information and related data Business related sensitive information The extent of what the agreement covers is entirely in the hands and freewill of the employer. Something that is of utmost importance is the language of the agreement. It can make or break his case, in case an employee is fired on grounds of violation and the contract is examined later.  

When Are Non-Compete Agreements Enforced?

Non-compete agreements come into force, after the relationship between the employer and the employee ends and the employer wants to prevent any chances of the leaving employee working in competition against them in his new role. Following situations can be considered as a competition:These agreements are enforced once the relationship between the employee and the employer ends. Convincing the co-workers to leave with them Joining the competitor in the same market Owning a startup in the same field However, a certain criteria has to be met for these agreements to be enforceable. It is advisable to have a legal counsel go through it to ensure that it is not restrictive and overly binding, hence harmful to the employee.  

TechMarcos’ take on Non-Compete Agreements

Even though some companies require their employees to sign a non-compete agreement after joining, there are those who understand how pressurizing it can be for the employee. It does not lay a foundation of trust between them and eventually affects the performance of an individual. Hence, they have started to do away with such agreements and choose to give that feeling of freedom to the employees. TechMarcos has also joined the league and prioritizes employee growth and happiness over everything else. Join our team and let your skills develop in a nurturing work environment.