Non-Compete & Non-Solicitation Covenant

Non-Compete & Non-Solicitation Covenant: a practical guide

A Non-Compete & Non-Solicitation Covenant records promises about competing work and contacting certain people or organizations connected with an employer. It describes the activities covered, the relationships protected, and how long any restrictions are intended to last.

What it's for

An employer may use this document when discussing limits on an employee’s work or business activities during or after their working relationship. The non-compete part addresses work or activities that may compete with the employer; the non-solicitation part addresses efforts to persuade specified customers, workers, or other contacts to leave or change their relationship with the employer.

The parties need to consider the employee’s role, access to business relationships or information, and the practical effect of each restriction. A broad restriction may affect the employee’s ability to find work or run a business, so both sides should describe only the activities and relationships they mean to cover.

This covenant does not by itself explain how confidential information may be used or who owns work or inventions. If the main concern is those subjects, a document focused on confidentiality or ownership may be a better fit. Rules about restrictions, signing, and required wording differ between countries and regions; check the rules where the document will be used or ask a qualified lawyer, especially when a lot is at stake.

Who uses it

• An employer and an employee discussing limits connected with a new or continuing work relationship.
• A business seeking to protect particular customer relationships from targeted solicitation by a departing employee.
• An employer and an employee deciding whether specific roles or activities may compete with the business after work ends.
• A small business owner and a key employee whose work involves close contact with customers, staff, or business partners.
• An employee asked to review proposed restrictions before accepting a role or leaving a position.

Terms to decide on

Competing activity

Describe what work, services, or business activity counts as competition, and connect it to the employer’s actual business. Avoid vague wording such as “any similar work” if the parties mean a narrower set of activities.

Covered people and relationships

Name the types of customers, prospective customers, workers, or other contacts covered by the non-solicitation promise. Clarify whether the restriction concerns only people the employee worked with or learned about through the role.

Restricted conduct

State what the employee agrees not to do, such as actively asking a covered customer to move its business. Distinguish direct solicitation from ordinary advertising or responding to an unsolicited inquiry if that difference matters to the parties.

Time period

Set out when each restriction starts and when it ends, including whether it applies during the work relationship, after it ends, or both. Use a clear start point and avoid leaving the duration open to interpretation.

Work and geographic scope

Describe the work, locations, or markets covered by any non-compete restriction. Make the scope understandable to the employee and relevant to the employer’s activities.

Exceptions and permitted conduct

Identify any activities the parties intend to allow, such as work in a different role or dealings with contacts the employee had before joining. Put exceptions in direct, specific language.

End of work relationship

Explain which event starts any post-work restriction, such as the last day of work, and how the parties will identify that date. Consider whether different restrictions should start at different times.

Common mistakes

• Using “competitor” or “solicit” without defining what those words mean for the parties’ situation. Unclear terms can leave each side with a different understanding.
• Applying the same broad limits to every employee, even when their duties and access to customer relationships differ. Tailor the wording to the role and the business interest being addressed.
• Leaving out which customers or workers are covered. A description such as “all customers” may create uncertainty about people the employee never knew or served.
• Failing to state whether a restriction applies during employment, after it ends, or both. Write the timing and start point clearly.
• Treating a non-solicitation promise as a ban on all contact with customers or former coworkers. State the conduct the parties intend to restrict and any intended exceptions.
• Copying wording from another agreement without checking that its defined terms, dates, and business scope match this relationship.

Before you sign

• Read each restriction and confirm that both sides understand the activities and relationships it covers.
• Check that the time period, start point, work scope, and any location limits are written clearly.
• Confirm that the covered customers, workers, or other contacts can be identified from the wording.
• Review any exceptions and make sure they reflect the activities the parties intend to allow.
• Remove unclear terms or explain them in Additional Terms & Provisions.
• Check the rules for restrictions, required wording, witnesses, notarization, or other signing steps where the document will be used.
• Make sure each person signing has the authority to sign for the named side, and keep a copy of the completed document.