The non-compete clause
What is the non-compete clause? Is it valid?
The employer and the employee are free to stipulate in an employment contract prohibiting the employee within a certain period from and after the termination of his employment, from:
[1] Starting a similar business, profession or trade; or
[2] Working in an entity that is engaged in a similar business that might compete with the employer.
The non-compete clause is agreed upon to prevent the possibility that upon an employee’s termination or resignation, he might start a business or work for a competitor with the full competitive advantage of knowing and exploiting confidential and sensitive information, trade secrets, marketing plans, customer/client lists, business practices, upcoming products and others, which he acquired and gained from his employment with the former employer. Contracts which prohibit an employee from engaging in business in competition with the employer are not necessarily void for being in restraint of trade.
[1] Starting a similar business, profession or trade; or
[2] Working in an entity that is engaged in a similar business that might compete with the employer.
The non-compete clause is agreed upon to prevent the possibility that upon an employee’s termination or resignation, he might start a business or work for a competitor with the full competitive advantage of knowing and exploiting confidential and sensitive information, trade secrets, marketing plans, customer/client lists, business practices, upcoming products and others, which he acquired and gained from his employment with the former employer. Contracts which prohibit an employee from engaging in business in competition with the employer are not necessarily void for being in restraint of trade.
However, non-compete clauses that appears to ban the employee from engaging in a similar business forever or a for an indefinite amount of time is generally void.
