The practical reality
Your account manager resigns. Not because he is dissatisfied, but because a competitor has made him an attractive offer. Within a few weeks, he is working for a company that serves the same clients, knows the same market and is active in the same commercial processes.
For you as an entrepreneur, this is not merely inconvenient. It can directly affect your clients, margins, pricing agreements, quotations, ongoing negotiations and commercial strategy.
Fortunately, his employment agreement contains a non-compete clause. Or at least — that is what you think.
In practice, a non-compete clause often turns out to offer less protection than expected. The clause was included years ago as standard wording, has never been reassessed and is not tailored to the employee’s role or to the information to which the employee has access.
That is risky.
A non-compete clause must not only have been validly agreed. Its substance must also be defensible. As an employer, you must be able to explain which specific business interest is being protected and why this particular employee should be held to the clause.
The legal point
A non-compete clause restricts an employee’s freedom to work elsewhere after the end of the employment relationship. Such a clause may therefore not be used as a general restraint on labour mobility or as a way to retain staff.
The clause must protect a specific business interest.
For entrepreneurs, this usually concerns the protection of the company’s business goodwill: clients, business relationships, confidential information, commercial knowledge and the company’s market position.
In the case of a departing account manager, it is therefore not only relevant that he is joining a competitor. What matters in particular is which clients he served, which quotations he knows, which pricing agreements he has seen, which commercial strategy he is familiar with and whether he can use that knowledge at the competitor.
A general reliance on “competitive risk” is usually insufficient.
In 2024, a legislative proposal was submitted for consultation to tighten the rules on non-compete clauses. The proposal included, among other things, a maximum duration, a mandatory justification, geographical limitation and compensation for employees when the employer actually invokes the clause.
The law has not yet been amended. But the direction is clear:
The non-compete clause is becoming less self-evident.
What does this mean for you as an entrepreneur?
For entrepreneurs, this means that it is wise not to review non-compete clauses only when an employee leaves. By then, it is often too late.
It should be clear in advance which employees are commercially or strategically sensitive for your business.
Not every employee has the same position. A junior employee without client contact requires different protection than an account manager with established client relationships or a sales manager involved in pricing, margins and contract negotiations.
It should also be assessed whether a non-compete clause is the right instrument. Sometimes a non-solicitation clause offers more targeted protection, for example where the main risk is not that the employee works for a competitor, but that he approaches your clients. In other cases, a robust confidentiality clause or non-poaching clause is more practical and easier to defend.
For entrepreneurs, the key question is therefore not: does my template contain a non-compete clause?
The key question is: does my employment agreement protect the clients, information and commercial position that really matter to my business?
Legally sharp – Tips for entrepreneurs
Do not use non-compete clauses automatically for every employee. Assess per role what protection is needed.
- Distinguish between employees with client contact, employees with access to confidential information and employees without a strategic position.
- Check whether a non-solicitation clause, confidentiality clause or non-poaching clause is more appropriate than a broad non-compete clause.
- Record at the start of employment and upon any change of role why protection is necessary.
- Review existing employment agreements and standard templates before an employee leaves.
- Ensure that the clause reflects the reality of your business: the clients, the market, the role and the information to which the employee has access.
Questions for entrepreneurs
What happens if your account manager starts working for a direct competitor tomorrow?
Do you know which employees have access to your key clients, margins, rates and commercial plans?
Are your non-compete clauses merely standard wording in the employment agreement, or have they been considered per role?
Is it clear which business interest you are protecting with the clause?
Could a non-solicitation clause or confidentiality clause be sufficient?
Are existing clauses still appropriate after a promotion or change of role?
Can you explain why a departing employee should not be allowed to start working for a competitor immediately?
In conclusion
A non-compete clause is not a guarantee.
For entrepreneurs, it is primarily an instrument that only works if it is properly structured, specifically substantiated and aligned with the employee’s actual role.
If you only review the clause when an employee leaves, you are already behind the facts.
The protection of clients, knowledge and commercial position must be properly arranged in advance.
Would you like to know whether your employment agreements, non-compete clauses or non-solicitation clauses sufficiently protect your business?
Please feel free to contact us without obligation. We would be pleased to think along with you about a legally sound and practically workable approach.
