RegisterLog In

non-competition employment agree

peterjc
Member
Tue, 29 Jul 2014 11:45:23 PM  (Last updated: Fri, 01 Aug 2014 09:44:13 AM)

Hi,I will work at new company soon and was asked to sign the employment agreement.

there is a non-competition clause like below:

"It is further acknowledged and agreed that following termination of the employee’s employment with **company name** for any reason the employee shall not solicit business from current clients or clients who have retained **company name** in the 6 months period immediately preceding the employee’s termination."

the part that I don't understand, the 6 months period is refer to;

1) cannot solicit current clients and clients in 6 months before termination?

Or

2) the 6 months means, anyone who become clients of the company during the 6 months before termination, you cannot solicit them forever/lifetime?

Could someone please advice. Thanks

KL Siew
Administrator
Wed, 30 Jul 2014 11:00:15 AM

You can consult a lawyer about it if you want. Show him the contract.

peterjc
Member
Wed, 30 Jul 2014 01:16:36 PM
Hi KL Siew,If based own your understanding, what does it means? It means 1 or 2?
DnH
Member
Wed, 30 Jul 2014 01:30:24 PM

I am a lawyer. Based on my reading of the contract, it is item 2. Of course, enforceability is another issue as it depends on various factors. Good luck with your new career.

peterjc
Member
Wed, 30 Jul 2014 02:06:36 PM
Originally posted by DnH on Wed, 30 Jul 2014 01:30:24 PM

I am a lawyer. Based on my reading of the contract, it is item 2. Of course, enforceability is another issue as it depends on various factors. Good luck with your new career.

Hi DnH, thanks for the reply.

Just in case, if in future, i no longer work at this company and work at others company or set up own business.  The future new company / my business is totally not their rival or does not compete with them, but coincidentally need to dealing with the former company's clients also, can the former company sue me for soliciting? 

Thanks in advance.

DnH
Member
Wed, 30 Jul 2014 09:47:44 PM

Technically speaking, based on the clause, you are not allowed to solicit customers even though your new company is not a rival to your ex-company, since the clause does not refer to whether the new company must be a rival or not.

However, in practical terms, if the new company is not a rival, the ex-company will probably not suffer any loss or damages if you solicit their customers, so they may not seek to enforce the clause against you. 

peterjc
Member
Thu, 31 Jul 2014 08:58:13 AM

Hi DnH,

The term is under the non-competition section.

Example: 
(XX = refer to number)

XX. Non-Competition​
It is further acknowledged and agreed that following termination of the employee’s employment with **company name** for any reason the employee shall not solicit business from current clients or clients who have retained **company name** in the 6 months period immediately preceding the employee’s termination.​
 

1) So, can it means valid only if it causes competition despite it does not mention competition inside the wording? Because the clause fall under the non-competition section?

2) can the contract act caused the clause void and not enforceable in law? or other laws that deem illogical to restraint me doing business with other in lifetime!

Wondering what would happen if they really sue me despite not cause competition to them! i will lose the lawsuit??

Thanks in advance.

DnH
Member
Thu, 31 Jul 2014 10:17:04 AM

It is a matter of interpretation. If they sue you, it will be up to the court to interpret whether they intended the clause to be read to prohibit competition, or prohibit solicitation generally. Generally speaking, I would think they intended to prohibit competition only since they would suffer no loss if you are in another non-competing business but have the same customers. Even if they sue you, they will need to prove damages suffered. 

All the best for your new job.

Lola
Member
Fri, 01 Aug 2014 09:44:13 AM

From my understanding of the non-competition employment agreement clause, it is normally applicable to employee with certain specializations for e.g Aerospace engineering, arachnologists, or even positions such as CEO's or CFO's.

These are areas where it would require special requirement by the employees( must possess PHD, experience in certain areas..etc) , therefore makes it hard for the firm to replace them if and when they leave the organizations.

So in order to prevent them from joining a competing organization this clause is included into the contract of employment, as more often than not these people would be exposed to certain amount of confidential information while in employment with the organization. 

I think you shouldn't really worry about this clause unless you are within the highly specialized field. 

  This topic is closed