Employers often include a non competition agreement in or along an employment contract. New employees are asked to read and sign it before being able to start their work duties.
Non compete agreement is the set of conditions that the employer and employee agrees on matters of confidentiality, intellectual property rights, non disclosure of trade secrets, and relationship with competitors in exchange for a privilege or benefit.
If the non compete agreement is signed before starting the assigned duties, the company may not be liable to give any special benefit after the employee is dismissed from work. If the employer offers the non-competition agreement after the employee has already started the work duties, a special benefit must be given and paid on the employee's last day.
Employers use the non compete agreement to ensure that dismissed employees will not disclose company trade secrets or information that may pose threat to their profitability, advantage, or security. A non-compete agreement may also assert that the materials, program, or system that the employee has contributed to the company are covered under "intellectual property rights".
The terms must give way to the employee's right to earn a living. The employee should not be hindered to secure employment in an area where no branch or sister company exists. The court encourages employers to give a considerable amount or benefit to the employee after signing such agreement.
The employee has the choice whether to sign the non compete agreement or not. The employee may also petition the court when the terms and conditions stated in the non-compete agreement are unfair or violates any civil rights stipulation.
Legal requirements for non compete agreement:
1. The agreement must have full consideration for the rights of both parties.
2. The terms are reasonable in protecting a legitimate business interest.
3. The terms are reasonable in matters concerning time, scope, and geography.
The goodwill established by the employer to the employee and clients is considered as an asset. This asset may be protected and maintained by the employer. The employee may enter into an agreement to maintain or promise not to destroy it.
However, the employer must prove that it has taken reasonable and adequate measures to create, maintain, and protect such goodwill, trade secret, or information. He or she must also prove that the latter gives the company a competitive advantage.
The court will balance the employer's interest and the welfare of the employee. It may set a modification on the terms to provide reasonable duration and scope for the agreement. It may also ask the employer to adjust the information value of the material depending on the market value. It reviews the intention of the employer in prohibiting former employees to be employed with a competitor or a rival company.
If the right to earn living or other civil rights is violated, the court may reject or nullify the non-compete agreement. Consult a Civil Rights attorney and learn more on how you can file a lawsuit.