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If you're struggling to get your head around what a non-compete agreement is, then you're not alone.
We want to make things clearer for everyone. So, in this guide, we've compiled a list of some must-knows before you start writing your non-compete agreement. That way you can put your agreement together with confidence.
A non-compete agreement is commonly used in competitive industries, where trade secrets and intellectual property can give one company the edge over another. The agreement acts as a contract between two parties, usually at the beginning of a working relationship, i.e. when a business hires a new employee or contractor.
The agreement states that the hired individual will not use any information gained during the partnership to start, buy or work for a competing business once they have left the company. The main reason for the agreement is that it helps to prevent new competitors emerging in the market.
A non-compete agreement comes in useful if you're worried about people using your intellectual property for their personal gain. A few common situations when you might want to use a non-compete agreement include:
You can use both a non-compete agreement and a non-solicitation agreement as part of an employment contract. Choosing whether to include a non-compete agreement or a non-solicitation agreement in a contract depends on the nature of your business.
While a non-compete agreement prevents an employee working for a competitor, or opening a competing business whey they leave, a non-solicitation agreement aims to stop an employee encouraging customers or colleagues to stop working with your business, and work with them instead.
There are certain clauses a non-compete agreement should include to make sure it is effective:
It's worth bearing in mind that a non-compete agreement is only enforceable in Australia if the court considers the clauses reasonable. This is to protect a business from restricting an employee or contractor unnecessarily. If you're worried about the legitimacy of your agreement, ask a legal professional to look over or even draft up your document for you.
With a document as important as a non-compete agreement, it's always a good idea to seek legal help in some capacity. Whether you hire a lawyer to draft up your non-compete agreement, seek legal advice on your final draft of the document or simply use a non-compete agreement template, it is up to you.
A well-written non-compete agreement can be the difference in your company losing it's competitive advantage or keeping it. That's why it's important to take time drafting your document and investing in the help of a legal professional to look over it.
Here are a few tips to consider when it comes to putting together a non-compete agreement:
The effectiveness of a non-compete agreement should not be underestimated. It is an integral tool for businesses operating in competitive industries. Using a non-compete agreement template will make sure you're along the right lines from the beginning.
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