Non-Compete Clause
A contractual term restricting an employee from competing with their employer after leaving.
A non-compete clause is a type of restrictive covenant in a contract of employment that limits an employee's ability to work for a competitor, or set up a competing business, for a defined period after their employment ends. Its purpose is to protect legitimate business interests such as trade secrets and client relationships.
In Ireland and the UK, such clauses are enforceable only where they are reasonable in scope, duration and geography and go no further than is necessary to protect a genuine interest. An overly broad clause risks being struck down entirely as an unlawful restraint of trade.
Because enforceability is fact-specific and courts scrutinise these terms closely, employers should draft them narrowly and take advice. Reform is under discussion in some jurisdictions to limit their use further.
