Non-Compete Agreement Format

When and how to use this letter

Use a non-compete only for employees who genuinely access trade secrets, key client relationships, or strategic plans — applying it to every junior hire dilutes its credibility and invites courts to disregard it. Before drafting, confirm that post-employment restraints are enforceable in your jurisdiction and whether additional consideration is required beyond the employment itself.

Keep the restraint narrowly tailored: a defined period, a defined territory, and a defined scope of competing activity. Overbroad clauses are not merely reduced by courts in many places — they are thrown out entirely. Tie each restriction to a legitimate business interest, such as protecting a confidential client list the employee actually handled, so the agreement reads as protection rather than punishment.

Have the employee sign before or at the start of employment, not months later when their bargaining power has changed — late signatures without fresh consideration are vulnerable. Give the employee time to read it and, for senior hires, suggest independent legal advice; an agreement signed under pressure is easier to challenge. One non-obvious tip: pair the non-compete with a non-solicitation clause covering clients and colleagues. Courts enforce non-solicitation far more readily, so it acts as a safety net even if the non-compete itself is narrowed.

Store the signed original securely and calendar the expiry date — enforcing a lapsed restraint is embarrassing and costly. When the employee exits, remind them in writing of the surviving obligations and the exact end date. If you choose not to enforce it, say so in writing; a formal waiver builds goodwill and removes uncertainty for the departing employee.

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