What is a non-compete clause, and is it enforceable?

A non-compete is judged as a package. A restriction that would be unreasonable on its own can be acceptable if the others are tight.

• Duration — six to twelve months is commonly accepted for employees; two years and beyond attracts scrutiny; three years or more is rarely upheld against an ordinary employee.
• Geography — a defined radius or list of territories where the business actually operates. "Worldwide" for a regional business is a classic overreach.
• Scope of activity — the narrower and more specific the restricted role, the more likely it survives. "Any business in the technology sector" almost never does.

The same clause is treated very differently depending on the relationship. Courts are most sceptical of non-competes imposed on ordinary employees, especially lower-paid ones with little bargaining power.

They are far more receptive to non-competes given by the seller of a business, where the buyer paid for goodwill and would be robbed of the bargain if the seller immediately reopened next door. Restrictions of three to five years are routinely upheld in that setting.

These get lumped together and should not be. They restrict different things and carry very different levels of enforceability risk.

• Non-compete — you cannot work in the field. The most restrictive and the most often struck down.
• Customer non-solicit — you can work anywhere, but cannot approach the former employer's clients. Widely enforceable when limited to clients you actually dealt with.
• Employee non-solicit (or no-poach) — you cannot recruit former colleagues. Generally enforceable, though anti-poaching agreements between companies raise competition-law issues.
• Confidentiality — you cannot use or disclose their information. Enforceable almost everywhere and usually the protection the employer actually needs.

This is one area where general guidance genuinely breaks down. California has long refused to enforce employee non-competes; several other US states restrict them by salary threshold or ban them for certain roles; and the federal position has been contested in litigation in recent years.

In England and much of Europe, restraints are enforceable only so far as reasonably necessary to protect a legitimate business interest, and several European jurisdictions require the employer to pay compensation during the restricted period. India treats post-employment restraints as generally void under contract law, while allowing restrictions during employment and in business sales.

Because the outcome turns on local law and current legislation, treat this section as a prompt to check your jurisdiction rather than as an answer.

Some jurisdictions will strike out the offending words or narrow the restriction to something reasonable. Others take an all-or-nothing approach and void the whole clause.

That difference cuts both ways. Where courts reform clauses, employers have little incentive to draft narrowly. Where they do not, an overreaching clause can leave the employer with no protection at all.