Non-compete agreement, this is an agreement by employer. As the growth of the company, an employer needs to hire more employees. But there is a big concern when the relationship has ended. The employee may know the secret of the company, including the trade secrets and goodwill. This is what to protect. You may use this agreement to protect your business as well.
The Legal Requirements
A valid non-compete agreement must be supported by the consideration. At least, at the time the agreement is signed. The other legal requirements are:
• Reasonable in geography, time and scope
• Protect legitimate business interest
Beside it, non-compete agreement must have some key provisions such as:
• The effective date of agreement
• Names and the addresses of the parties in the agreement
• Reason for not to compete
• The compensation of the noncompeting parties
• Signature from the authorized people
To get the consideration from the employees, employer needs to exchange it with something valuable. But this is so depending on the time. If employee signs the non-compete agreement to begin the employment, it is sufficient for consideration. But if they sign it after beginning employment, it may not valid for the promise. The employees have to receive something else for the promise.
When You Need Non-Compete Agreement
In the most case, non-compete agreement was made before employment. But in these situations, the importance is getting higher.
• Two companies or business parties are ending the business relationship
• An employer is terminating the relationship with its employee
• A company and a consultant are ending the business relationship and the company wants that the consultant will never compete with the company in the new setting.
Why Non-Compete Agreement is so important
In a business, there is no co-eternal. When a company ends its relationship with a partner or an employee, there will be a huge change on the relationship. The previous partner may become a competitor. If they use your secret to compete, course it can be dangerous. It will make the competition to get harder. For this, non-compete agreement was made as an effort to survive.
How to Make a Non-Compete Agreement
The best way to create a non-compete agreement is by asking it to the lawyer. Ask them to create it for you. If you are looking for a reference, you can download and read Non Compete Agreement Template below. But however, this is just for reference to give you a more clear understanding about it. It should be better if you let the professional create the agreement for you or creating more suitable template for your company.
Employee Non Compete Agreement (27.5 KiB, 420 hits)