When you take on a new job, you’re excited about the paycheck and the work. However, buried in the employment contract could be a non-compete clause.
It’s a rule that can decide what comes next when you walk out the door. Many sign without a thought, only to discover it restricts their next move.
So, what are non-compete clauses in employment contracts, and how do they work?
Here is everything you need to know:
What Are Non-Compete Clauses?
A non-compete clause is a section of your job contract that prevents you from working for a competitor or opening up a similar business when you leave.
It’s like a contract you make with your employer: “I won’t use what I learn here against you.”
Employment contracts often contain non-compete clauses, and employers love them because they protect their businesses.
In Kenya, non-compete clauses in employment contracts are governed by the Contracts in Restraint of Trade Act, Cap 24.
You don’t want to leave and bring their secrets to someone else, like how they make their product unique or their best customers.
Remember this: If you work at the company creating the world’s best electric bicycle, no one wants you to leave and work for another bicycle company, revealing its battery secrets.
Employment contracts include non-compete clauses to prevent that.
How Do They Work?
Non-compete clauses have several components that work together.
The scope
This shows you what you most definitely cannot do. It may say you cannot work for another company in the same field or prevent you from contacting your old employer’s clients to take their business.
Duration
This is the length of the rule. It can be three months, one year, or two years. In the meantime, you’re essentially stuck waiting to switch to a competitor.
Geography
This defines the scope of the rule. It could be your town, country, or a defined radius, about 30 miles from your old office.
Consideration
If you get your signature when you start the job, then it counts. If they add that clause later, they may offer you a pay increase or bonus to make it right.
Let’s say, for example, that you are a graphic designer working for a small studio. An even more ridiculous clause thinks you can’t work for another design firm within 20 miles for nine months after you go.
That’s how non-compete clauses in employment contracts are designed to work.
Are Non-Compete They Legal?
Not all non-compete agreements are enforceable in court. The law includes rules designed to make them fair.
They have to be reasonable.
.
That means the scope, length, and scope can’t be too great. A clause that says you can’t work anywhere on Earth for 10 years? That’s not going to fly.
Legitimacy
The employer must have a legitimate reason to use it, a legitimate interest. Maybe they trained you in some proprietary skill, or you know their secret management style. They’re not allowed to just put a non-compete on you out of nowhere.
Safety for the public
Third, it isn’t harmful to the public. This is about public policy. Patients lose if only one dentist within an hour, and your non-compete prevents you from working nearby. Courts don’t like that.
These laws vary from place to place. In places like Kenya, they might be enforced if the rules are specific. So, a lot depends on where you are.
How Are They Enforced?
But if you violate a non-compete clause, your former employer won’t exactly shrug it off.
They can help you petition a court to prevent you from working at your new job. Register to continue.
That court order is called an injunction, and it’s serious business.
But you’re not defenseless. If the clause is too harsh, let’s say it covers a large geographic area or lasts indefinitely; you can tell it’s unreasonable.
Courts tend to side with employees in cases where the rules seem over the top. If a coffee shop says that means you can’t work at any café in the state for five years, a judge might say, “That’s too much.
If you lose the case, the result hurts. You may owe damages, have to pay the employer’s legal fees, or even have to leave your new gig.
And that’s why knowing about non-compete clauses in employment contracts is vital before you sign.
Advantages and disadvantages
Advantages of Non-Compete Clauses in Employment Agreements
Protects Business Secrets
They’re called non-compete clauses, and they prevent employees from sharing confidential information with rival companies. This protects a company’s proprietary processes or client lists even after the person leaves.
Invests in training
Employers can use money and time to train workers without fear that they’ll jump to a competitor. This increases businesses by developing skillful groups.
Keep Customer Relationships
These clauses make it illegal for ex-employees to take clients to a new job or business. This helps ensure that the company retains its loyal customers.
Supports Business Stability
Employees can’t immediately jump to a rival when companies apply the pressure. It allows employers to adjust after someone leaves.
The downside of non-compete clauses in employee contracts
Limits Job Options
It forbids employees from working in their field for a certain length or within a geographic area after they leave. That makes it more challenging to land a new job quickly.
Lowers Wages
Workers might want to earn less if they can’t change jobs quickly. Employers don’t have to increase pay to retain them because of limited options.
Hurts Career Growth
Non-compete clauses prevent employees from accepting better jobs or starting their own companies. This takes time away from them building their career.
Slows Innovation
Without the ability for people to casually change jobs, new ideas don’t diffuse as quickly, which takes time to improve in industries progressively.
Other Options Besides Non-Competes
Employers do not always require a non-compete. An NDA keeps you from disclosing proprietary information but doesn’t prevent you from working elsewhere. It is less restrictive and often seems more equitable for employees.
Another option is a non-solicitation clause. This says you can’t take clients or coworkers with you as you go. It preserves the employer’s business without shutting you out of your career.
These options can function free of the grueling restrictions in non-compete clauses in employment contracts.
Tips for Employees
Don’t just sign a contract with a non-compete without reading. Read every word.
Ask:
- How long does it last?
- Where does it apply?
- What jobs does it block?
If the terms seem too restrictive, such as if you’d need to leave the country to be able to work again, discuss them with your boss. Say what your anxiety is, and some will adjust it.
A lawyer in Kenya can help if you are dealing with a non-compete clause. They will know whether the clause violates local rules or is too draconian.
Now, checking is cheaper than fighting later in court. With non-compete clauses in employment contracts, knowledge is power.
Tips for Employers
If you are a business owner, reconsider your non-competes.
Do you need one? Be specific and ensure it’s not unfair; courts detest those overly punitive to workers. NDAs or non-solicitation clauses may do the work instead, protecting your secrets without you making enemies.
Conclusion
Employment contracts feature non-compete clauses that are a see-saw between protection and freedom.
They protect employers from fading into the background but can corner employees into difficult positions.
They impose clear limits, scope, time, and geographic area, but only where the law permits. Where you live, what you do, and how the clause is worded make a difference.
They’re not leaving yet, but the ground rules are changing. Whether you’re signing a contract or drafting one, take note. Ask questions.
Get help if you need it. Protect your future by being prepared for non-compete clauses in employment contracts.
FAQs
What Is a Non-Compete Clause, Anyway?
A clause in your employment contract says you can’t work for a competitor or start a similar business after leaving. It’s designed to protect your employer’s secrets, such as customer lists or proprietary skills they taught you to do your job.
Can I refuse to agree to a non-compete clause?
You don’t have to sign, but you may lose the job. If it’s tied to a new contract, you can negotiate to change it, say, to shorten the time or area. If you explain, employers sometimes agree.
What is the typical duration for non-compete clauses?
It varies according to the job and the place. The average lifespan of overarching trends is 6 months to 2 years. It would be unnecessarily rigid any longer, and a court might toss it out if you contest it.
What are the repercussions of breaching a non-compete clause?
Your former employer may try to sue you or even obtain a court order barring you from working. You could owe money, or maybe have to leave your new job. But if the clause is unfair, you can contest it and possibly prevail.
How can I get out of a non-compete clause?
Sometimes. A court might deem it invalid if it’s too generic — covers too wide an area, or lasts too many years. You can also negotiate with your employer to drop it, especially if you’re leaving on a good note.
Are non-compete clauses in place for all employment?
Not always. They’re regularly for jobs with secrets or specialized training, like tech employees or salespeople. However, some places outlaw them for low-wage jobs, such as fast-food workers, because it is not fair to restrict them.
What is the difference between a non-compete and a nondisclosure agreement (NDA)?
A non-compete prevents you from working for competitors. An NDA will only prevent you from talking about secrets. NDAs don’t restrict where you work, so they’re not as strict.
Can my employer add a non-compete after I start working?
Yes, but they have to give you something for it — a raise or a promotion, for instance. If they don’t, that may not stand up in court. In legal terminology, this is known as “consideration.”
How can I tell if my non-compete is legitimate?
See how much time it takes, the extent, and what it prevents you from doing. If it’s short (six months), local (your city), and specific (your industry), it’s likelier, to be fair. A lawyer could tell you for sure.
Can I have another job outside the industry (non-compete)?
Usually, yes. If your clause only covers your field as it exists now — say, tech — it wouldn’t bar you from switching to something else, like teaching. Read the contract to confirm.
What do I do if I’m asked to sign one?
Please read it carefully. Ask how it will affect the jobs you have — and will have — in the future. Consult your boss or a lawyer if it’s confusing or harsh before signing. It’s your career, don’t rush.
How do I get help with a non-compete clause?
A good Kenyan lawyer is your best bet; they understand the rules of where you live. You can also look online for your area’s laws or ask a trusted friend who has been through it.
