Employee Handbooks: Non-Compete Clause

2 Mins read

Employee handbooks are an effective way for managers and employers to convey their workplace policies and different procedures.  Whether you are trying to address an office culture or actually build one, an employee handbook should be well-thought and rightly prepared. Although they do hold high importance, employment handbooks aren’t considered as enforceable contracts. 

What is an employee handbook?

Employee handbooks can often go by other names such as the staff manual or an employee guide. 

Regardless of what name a company goes by for it, an employee handbook is designed to cover all the information that an employee should know. Very often employers attach such a document to the welcoming email. Such a handbook helps make an employee feel more competent from the beginning and can increase efficiency.

What do most handbooks include? 

Since every company’s culture, goals and visions are different, such a handbook should be customized. Nevertheless, usually, such a handbook includes: 

  • Organization’s vision, mission, values, and culture;
  • Internal policies such as days-off (holidays, vacations, sick days); anti-discrimination, etc.;
  • Expectations on the results to be achieved;
  • Legal information, obligations, and rights on the employment and the company.

Non-Compete Clause

Another section that managers tend to include in their employee handbooks is the non-compete clause. A non-compete clause is an agreement between a manager and an employee, which doesn’t allow the employee to work with direct competitors for a set period of time after the employee leaves the company. The base of this clause is to not spread internal company information. For example, if Ericca is employed at the X video production company and then decides to join the Y video production, she may share internal X company information and knowledge. 

non-compete clause

For the non-compete clause to be valid, it should tick the following attributes:

  • First, it shouldn’t sound like a threat to the employee or a punishment for leaving the job. In fact, it should be formulated in such a way that it aims to protect internal information and knowledge of the company;
  • It should benefit both parties. Basically, the employer benefits because it has its information protected, while the employee has the benefits of the job itself;
  • The constraints should be reasonable. This means that the constraints shouldn’t be longer than the information is valuable. Each case is different, but usually, the constraints are from 6 to 1 year. In addition, the geographical area shouldn’t be unreasonably broad. Lastly, the fields should be closely related.

In some states, like California, these non-compete clauses aren’t enforced because they don’t contribute to the innovation market. In some other countries, they are pretty hard to enforce. Either way, each employer no matter the state or the country should check the official regulations and approaches. 

Creating a Non-Compete Clause

If you decide to create a non-compete clause for your employee handbook, follow the below steps:

Identify your competition

Beforehand, you should acknowledge your competitors and your market. A direct competitor of yours is whoever offers the same services and products as you, and from which possible conflict of interest could arise.

Prepare your agreement

Prepare your agreement by using your internal company policies and regulations. It should reflect the specifics of your organization.

Review it legally

It is important for your company’s lawyer to review it and check for any flaws or omissions. If everything is alright with your lawyer, feel free to present the clause to your employee.

employee handbook

Should your employees receive a non-compete agreement?

As a final thought, it is obvious that such an agreement has benefits for managers and employers, because it is a good way to protect the company’s internal information, data, and knowledge. On the other hand, the tricky part could be that it can make a job less appealing to a potential employee.

Further Reading:

Expertise Mapping – Understanding Employee Skill Matrix Charts
Strategic Performance Management
Open Enrollment Checklist

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About author
Fatjona Gërguri is the content writer for Employee Experience Magazine, covering the relevant topics about employee experience, organizational culture and general HR topics.
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