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Does a non-compete clause in the employment contract hold?

The clause does not bind further than is reasonable. The assessment looks at whether there is secret information with commercial value, whether compensation is paid during the binding period and whether the duration is proportionate.

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What the source says

  • Section 38 of the Contracts Act: an undertaking not to compete does not bind further than can be considered reasonable.
  • Section 2 of the Trade Secrets Act: the information must be kept secret and have commercial value because it is secret.
  • Section 7: liability after employment ends requires exceptional reasons.

Source rows

For the employer · How the employer puts the question

Describe the protected interest in the clause, set the compensation in the contract and keep the duration to what the protection needs.

For the employee · How the employee puts the question

Check whether compensation is paid and what information the clause actually points to, a clause without a protected interest is weak.

Next step

Test the clause point by point in the tool and take the outcome into the negotiation.

Open the tool: Non-compete clause, does it hold?

All questions

The rows reproduce what the source says. They are not legal advice, and applying them to a specific case is the reader's or their counsel's decision.

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