It is common to see such clause existed in the Employment Contract: -
“Non-Competition Clause:
During the term of employment and for a period of “X” year after the termination of employment, the employee agrees not to engage in any activity or employment that is in direct competition with the business of the employer. This includes, but is not limited to, soliciting, accepting, or engaging in any business transaction with any customer, supplier, or employee of the employer. The employee acknowledges that this clause is reasonable and necessary to protect the legitimate interests of the employer, and that any breach of this clause may result in irreparable harm to the employer. The employee further agrees that, in the event of a breach of this clause, the employer shall be entitled to seek injunctive relief and/or damages."
Do not worry. Generally, such clause is void as the former employee is protected by Section 28 of the Contracts Act 1950, unless it comes under the exceptions, i.e. when goodwill is concerned, when a partnership is dissolved, and when a partnership continues to subsist.
While it is a well-established principle that an employer cannot prevent a former employee from using the knowledge and skills acquired during employment, this does not mean that the employee can disclose or misuse the company's confidential information or trade secrets.
If the sole purpose of the non-competition clause is to restrict competition and nothing else, it may not be legally enforceable. However, an employer is entitled to protect their trade secrets and prevent their former customers from being solicited or otherwise enticed away.
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For further information, please do not hesitate to contact us at How & Hospera 0323001299 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.
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