Contracts are a way of life. Whether you’re employed within a business or writing up one for your employees, the chances are that every one of us will sign an employment contract at some stage of our lives.
But when it comes to writing a contract there are also certain clauses that exist to protect your business from future damages. One of these is the non-compete clause.
What is a non-compete?
Essentially, a non-compete clause restricts your former employees from working with or sharing information with competitors in the same line of work as you are.
A non-compete clause can be used to protect your business from:
- An employee recruiting your clients
- An employee being poached by one of your clients
- A former employee poaching your current staff or former staff starting their own business together
- An employee or former employee sharing trade secrets with your competitors
So if you’re a photographer, for example, a non-compete clause would help prevent a former employee who starts their own business from poaching your existing staff.
Non-compete clauses are usually set for a certain period of time, or in contractual terms what is “deemed reasonable”, whether it’s 12 months, 6 months, 3 months or even a few weeks.
Of course, when it comes to restricting someone’s trade, you as an employer need to have a clear understanding of what is both fair and legal. Which is where the “deemed reasonable” part comes in. If you hire another videographer for a short contract, you can’t then restrict them from working in videography after that contract ends. That would be an illegal and unfair restriction of their trade. But you could prevent them from working with a wedding venue you already have a filming arrangement with.
Using a non-compete in business
The wedding industry is one industry filled with smaller business and individual business owners, which is what makes it such a good community. But we also want to make sure that we’re protecting the businesses that already exist and who are training the next generation of business.
Non-compete clauses can be particularly useful for businesses that use contractors, such as photographers or videographers. It can help prevent you from providing training to up-and-coming business owners who could then potentially steal your business IP when they start their own business.
To have a non-compete clause in play you must have legitimate business interests to protect. You also need to be able to prove that a former employer is damaging your business if they do breach the contract.
It’s simple to insert a non-compete into an employment contract, but making sure that it is fair and reasonable might be something you’re not so comfortable with. When it comes to contract law, we recommend seeking legal advice to see whether your ideas for a non-compete will pass the test.
What to do when signing a non-compete clause
If you’ve found yourself working for someone with a non-compete clause make sure you read it over carefully and know your restrictions. This extends to what areas you are restricted from talking about, working in, as well as the period of time you are restricted for.
Making sure you know all of these details to start off with not only means they’re all on the table to begin with, but it also means that you’ll have fewer issues if you do eventually move on.
If you think that a non-compete clause is unreasonable then chat with your employer about what your options are, or seek legal advice.
