The employment contract that your business drafts can help protect your company or leave it vulnerable to misconduct by your employees. Many contracts focus on what the company will do for the worker and what they expect the worker to do for them, but others including rules about what they don’t want their employees to do.
Restrictive covenants limit what actions a worker can take while employed by a company and for a specific amount of time after the exit from the company. What are some of the more common restrictive covenants that employers can include in their contracts?
A non-compete agreement prevents an employee from going to work for a competitor or starting a competing business in your general geographic area or for a specific amount of time.
A non-disclosure agreement requires confidentiality on the part of an employee. It prevents them from revealing certain information to outside parties both during and after their time at a specific business.
Competition comes in many forms, including directly soliciting clients or customers a worker got to know while employed by a specific company. If that business has a non-solicitation agreement in their employment contract, that individual has no right to approach those customers or clients to try to get them to patronize their new employer or recently started business.
If there’s anything worse than a former employee poaching your clients, it would be them coming in and taking your top talent. When someone goes to start their own company, they could empty your roster by offering slightly better compensation or a better job title. Non-recruitment agreements prevent someone who has worked for your company from hiring your other staff.
Using employment contracts to limit the actions that an employee takes while they work for you and afterward can help you protect your company from activities by individuals that could diminish its income.