In contract law, two parties are made bound to an agreement under law. One of the clauses of this law, called as non-compete (NCC) or covenant not to compete (CNC) clause, which states that one party will not compete with other party in its trade or profession. It is basically a written agreement that hold legal importance. For instance, an employee is not allowed to start a trade or profession in competition with its employer. This is usually termed as ‘restrictive covenants’.
This law is enforced by the court of the country. So, in order to enforce this agreement an organization must check the laws of the country. This agreement is generally implemented when a job or business relationship is ended. It may also be implemented before starting. It prevents the employee from competing directly or by working for the competitor.
The NCC or CNC clause also postulates that an employee is allowed to adopt a business or profession in competition to its employer after resignation from the organization or institution. The contract says that, an employee can take advantage of the private information and secrets such as marketing plans, business strategies, new products etc of the previous organization. This clause also include an agreement with a condition that the employee must not compete with the employer over a certain geographical area. Sometimes restriction is placed for a specific duration of time after the employment ending. The employee is also bound to not work in the same industry or a competing organization. Employees are also prohibited from recruiting the employees from the staff of previous employer.
Basically Non-competent Agreement is linked with the guardianship of the confidential information regarding the business of employer which incase revealed would possibly destroy his business. In such cases, it hold strong enforcement capability. This agreement must also include an additional clause in which permission is given to the employee that he/ she could start work in a particular organization, in a particular geographical area and could also start a business in collaboration with the employers’ business.
The Non-competent Agreement give advantage to both employer and the employee. This contract has great usefulness for the employer in terms of keeping the employee from sharing the organization’s confidential information, experience, strategies etc. The employee also draw benefit from this agreement by receiving something of great value. The value could be in the form of job or if hired already promotion qualifies as the most valued item for the employee.
Here is our collection of 39 Ready-to-use Non-Compete Agreement Templates,