A restraint of trade agreement, also known as a non-compete agreement, is a legal document that restricts an employee`s ability to work for a competitor or start a competing business for a certain period of time after leaving their current employer. Such agreements are commonly used by companies to protect their trade secrets, client lists, and intellectual property.
To understand how a restraint of trade agreement works, let`s consider an example. Imagine that you work as a software developer for a tech company called ABC Corp. As part of your employment contract, you signed a non-compete agreement that prohibits you from working for a competing tech company or starting a similar business for six months after leaving ABC Corp.
One day, you decide to quit your job at ABC Corp and start your own software development company. However, your former employer reminds you of the non-compete agreement you signed and threatens to sue you if you go ahead with your plans. What are your options?
The first thing you need to do is read the agreement carefully and understand its terms. Is it valid and enforceable? Does it cover the type of work you plan to do? Is the time period and geographic scope reasonable? In some states, non-compete agreements are prohibited or restricted, so you need to check the laws that apply to your situation.
Assuming that the non-compete agreement is valid, you have a few options. You could negotiate with your former employer to modify the agreement, such as reducing the time period or narrowing the scope of the restrictions. You could also seek legal advice from an attorney who specializes in employment law to determine your rights and options.
If you decide to challenge the non-compete agreement in court, you will need to show that it is unreasonable and unfair, and that it imposes an undue burden on your ability to work and earn a living. This can be difficult to prove, especially if the agreement is well-drafted and narrowly tailored to protect the employer`s legitimate business interests.
In conclusion, a restraint of trade agreement is a powerful tool for employers to protect their assets and control their workforce. However, it can also be a source of conflict and litigation if it is overly restrictive or unfair to employees. It is important for both employers and employees to understand the legal implications of non-compete agreements and to seek professional advice when needed.