To protect their business interests and prevent employees from working for competitors, some companies place restrictive covenants – non-compete clauses — in employment agreements.

These can be particularly important to companies with global assignees, as non-compete clauses are considered one way of protecting human capital and intellectual property when an employee is in the host location and exposed to new opportunities.

However, non-competes don’t always have the desired effect and can prevent employees from accepting employment offers if they feel they’ll be unfairly locked in to their positions. Those who do accept an offer and sign these agreements may be less engaged, seeing the employer as unnecessarily controlling. Yet they may not want to negotiate the terms, as it might be assumed they’re considering other jobs.

Also, if an employee does end up going to a competitor – regardless of the non-compete – repercussions are unlikely. In many locations, non-competes aren’t even legally binding or enforceable. In areas where they are, the time and expense involved in taking legal action against the employee are often not worth it, except, perhaps, if the employee is a highly valued executive.

Despite this, though, some companies still believe non-compete clauses are needed. In such instances, there are a number of things to keep in mind when utilizing these, including the factors most likely to impact their validity.

For more information please contact MSI