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Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

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# A B C D E F G H I J L M N O P R S T U V W X Y Z

Non-Compete Clause

What does non-compete clause refer to?

A non-compete clause is placed into a contract to prevent employees, independent contractors, or partners from competing with a former employer. This means they can’t engage in similar business activities and often they can’t work with a competitor of the previous company for a certain amount of time.

Non-compete clauses are commonly used by employers to protect their business interests and client relationships. For this reason, they’re particularly common in industries where employees have access to sensitive information such as technology, finance, and sales. By restricting individuals from immediately starting to offer the same services or products, employers aim to safeguard the confidential information and trade secrets they’ve shared.

Depending on the severity of the case, the circumstances involved, and the location of the company, breaches can result in legal consequences such as fines. However, to ensure that they are enforceable,m companies must draft non-compete clauses carefully. In many cases, they are deemed unreasonable and dismissed.

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