Non-Compete
Contract Type:
Generic Contract
Jurisdiction:
The Employee shall not, for a period of 6 months after the termination of their employment with the Company, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be employed or engaged by or connected in any manner with any company in competition with the business of the Company as at the date of termination of employment. For the purposes of this clause, "company in competition with the business of the Company" shall include any company which is engaged in a business substantially similar to or competitive with any business in which the Company is engaged as at the date of termination of employment. The restrictions in this clause shall apply to any company which operates within the United Kingdom. The periods for which the restrictions shall apply shall be reduced by any period during which the Employee is placed on garden leave immediately prior to the termination of employment. This clause constitutes an entirely separate and independent obligation on the part of the Employee. The validity or enforceability of this clause shall not be affected if any other clause or provision of the Agreement is invalid or unenforceable for any reason. If any part of the restrictions or obligations in this clause is found to be unreasonable or unenforceable, that part shall be struck out but the remaining parts shall remain in full force and effect.
Explanation
Here is a plain English explanation of the Non-Compete clause:
- The employee cannot work for or be involved with a competing business for 6 months after leaving the company.
- Competing means any business substantially similar to or in competition with the company's business.
- This applies to competing businesses operating anywhere in the UK.
- If the employee was already placed on garden leave before leaving, that time counts towards the 6 months.
- This clause is separate and still valid even if other parts of the contract become invalid.
- If part of the restrictions are unreasonable or unenforceable, that part is removed but the rest still apply.
- The purpose is preventing the employee using knowledge or contacts gained with the company to then compete against it after leaving.
- It restricts the employee for a set period to protect the company's business interests
Non-compete clauses emerged in England in the late medieval period as a means for masters to prevent craftsmen from utilizing trade secrets learned under their employ to aid rival workshops.
Skilled laborers contracted to not engage in the same trade or compete with their former master for a set time period after leaving service. This allowed masters to protect proprietary knowledge and techniques in an era before intellectual property laws.
Over subsequent centuries, the clauses evolved as a tool for companies to guard against unfair competition from former employees. With inventions and industrialization came valuable expertise that firms sought to shield. Restrictive covenants in employment contracts became common to limit workers using in-house knowledge to immediately establish or join competing ventures.
As business grew more complex, non-competes served to safeguard proprietary assets like customer data, price lists, and business strategies. Companies utilized the clauses to prevent departing staff exploiting confidential information. Though restrictions faced some legal limits, non-competes remained an important contractual device in English law to justly balance employer rights and employee freedom.
Today, these clauses continue preventing gainful knowledge or insider competitive advantage being directly used against the former company. They enable firms to protect legitimate business interests without overly restricting worker mobility.
The evolution of non-competes reflects companies adapting English contract law to secure valuable intangible assets created by an employee's unique experience.
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