As a professional, I know that the topic of restraint of trade clauses in employment contracts can be a bit complex. However, it’s an important topic to address, particularly for people who are entering into new contracts or considering making changes to existing ones. In this article, we’ll take a closer look at restraint of trade clauses and provide an example of what they might look like in an employment contract.
What is a Restraint of Trade Clause?
A restraint of trade clause is a provision in an employment contract that limits an employee`s ability to compete with their employer after they leave their job. These clauses aim to protect the employer`s intellectual property, client relationships, and other proprietary information. Essentially, a restraint of trade clause is meant to prevent former employees from using their position at the company to start a competing business or steal the employer`s clients.
While restraint of trade clauses are common in many industries, they have come under scrutiny in recent years as some employers have used overly restrictive clauses to limit an employee`s ability to work in their chosen field.
Example of a Restraint of Trade Clause
Here’s an example of what a restraint of trade clause might look like in an employment contract:
“Employee agrees that during the term of their employment with Employer and for a period of 12 months following termination, regardless of the reason for termination, Employee will not directly or indirectly engage in any activity that is competitive with the business of Employer, including but not limited to soliciting or serving any clients of Employer, or working for a competitor of Employer within the same industry or geographical region as Employer.”
This clause is meant to limit the employee`s ability to work for a competitor or start a competing business within a certain time frame after leaving the company. The clause may also prevent the employee from soliciting or serving any clients of the employer, which is meant to protect the employer`s client base.
Things to Consider
While restraint of trade clauses can be useful for protecting a company`s intellectual property and client base, they must also be reasonable and not overly restrictive. Courts have invalidated many restraint of trade clauses that have been deemed unreasonable or overly restrictive.
As a professional, I encourage both employers and employees to consult with legal counsel before signing an employment agreement that includes a restraint of trade clause. This can help ensure that the clause is fair and reasonable, and that both parties understand its implications.
In conclusion, restraint of trade clauses are an important consideration for anyone signing an employment contract. They can protect a company`s proprietary information and client base, but they must also be reasonable and not overly restrictive. By understanding the implications of these clauses and seeking legal advice when necessary, employers and employees can ensure that they are entering into fair and equitable agreements.