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I'm currently leaving a company but they want me to sign a non-compete before leaving.

I don't have any formal contract with the company nor anywhere did I sign that I would commit myself to it.

Is there any benefit for me in doing so? Why would I want to do this?

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    Are they offering you something to sign the non-compete? – user1666620 Nov 4 '18 at 14:26
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    No, they are not offering anything in return – Alima Secdi Nov 4 '18 at 14:30
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    If they don't offer anything in return, there's no point in signing it, is there? – Mast Nov 4 '18 at 17:58
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    Wait, when you say you "don't have a formal contract" do you mean you never had a written contract while you were working there? If that's the case, why start now? – Steve-O Nov 4 '18 at 21:49
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    Are they gonna fire you again? A contract is normally a business exchange. You're missing the part where they give you something. – Nelson Nov 5 '18 at 4:07

10 Answers 10

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No. You gain nothing by signing and potentially limit your employment options by agreeing to the non-compete. By rights, if they were acting legitimately they would have had you sign one as part of your initial employment conditions before you even started the job. This is retrospective CYA nonsense and you should treat it as such.

If they really want you to sign, ask for a bonus in return for potentially limiting your employability. Otherwise just walk away

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    Drop the last paragraph. They don't want you to sign sufficiently much to pay you what it's worth, which is at least your full prior salary times the length of effect of the non-compete. – R.. Nov 4 '18 at 18:29
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    @R.. - I don't understand why you said "drop the last paragraph", when what you're suggesting is exactly what that paragraph says -- if they want you to sign, then ask them to pay you fair market value for what you're signing. Depending on how restrictive the agreement is, full salary may be more than the actual value of what they are asking for. – Johnny Nov 4 '18 at 21:22
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    For anyone else wondering: CYA = cover your ass (?) – problemofficer Nov 4 '18 at 22:35
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    @Johnny: Further detail could make the last paragraph better rather than dropping it, but just saying "ask for a bonus" does nothing to draw attention to how astronomically huge the bonus needs to be in order for it to be deterministically better for OP rather than a gamble. – R.. Nov 4 '18 at 23:09
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    @R.. It depends how broad a non-compete they want. If they just want you not to work for their direct competitors, they have few competitors, you didn't want to do that anyway, and it's just for a year, even just two month's salary might make it a good deal. They may just want you not to work on a particular product area (enterprise storage systems, self-driving cars, whatever) and that might not even be one you're interested in working on anymore. We don't know. The point is, the OP has to get fair value. – David Schwartz Nov 5 '18 at 1:36
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The non-compete agreement you're being asked to sign is a contract. In many countries, forming an enforceable contract requires all five of the following:

  • A lawful purpose, in which the things the contract requires of the parties don't break any laws. This would include any restrictions on whether or not the kind of contract you're being asked to sign is valid where it was executed.
  • An offer, where one party makes a proposal to the other.
  • Consideration, where each party gives the other something in exchange for that they're getting.
  • Capacity, where both parties have ability to understand what's in the contract and are legally allowed to be party to it.
  • Acceptance, where both parties decide that the consideration they're getting for what they're giving is equitable and agree to what's in the contract, often by signing it.

The contract your company proposes has lots of consideration for them (they get the benefits of not having a former employee at a competitor) and none for you. Because they are offering you nothing in return for staying out of their industry, you have no incentive to accept what they propose. The time to have done that would have been when they were offering you a job in the first place.

The easiest route would be to reject their offer outright. You've resigned, so all they can really do at work is terminate your employment early. The worst they could do after you leave is file a malicious suit for misappropriating their trade secrets. Even if they don't win, you still lose because defending yourself will cost money and time, but they still run the risk of an expensive countersuit.

Negotiating fair consideration would require that you figure out what you would lose by abiding by their terms. If signing would force you to take a position in another field that doesn't pay as well, you should demand the difference or, if you can't work at all because of it, the full value of your salary and benefits. If the company was dumb enough to try this as you were leaving, I'd penalize them at least 25% additional to make sure they really want you out of circulation, but that's just how I do business. Whatever goes into the agreement, the consideration has to last the full duration of the time you're out of circulation and should either be paid up front or, if they stop paying you, the contract becomes void. (All of this takes time and money to arrange and is why it's easier to simply decline their offer.)

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    This is a good answer. It could be improved by mentioning that various jurisdictions have restrictions on what is enforceable in a non-compete contract and that it would be beneficial for the OP to do a bit of research to determine what is enforceable in their jurisdiction. That assumes that the OP desires to enter into negotiation, rather than just outright rejecting a non-compete contract at all. The OP should note that they loose very little by beginning such a negotiation. While it's unlikely, it's possible the OP could get more than they expect. – Makyen Nov 5 '18 at 1:30
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    I would add to @Makyen's comment that up to my knowledge all NCAs must have a limited time span and cannot/should-not be lifetime, i.e. banning the OP entirely from working in that sector for his entire mortal life. My jurisdiction is Europe, OP's is not specified – usr-local-ΕΨΗΕΛΩΝ Nov 5 '18 at 8:19
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    The lawyer in me likes this answer, but I would caveat it by saying the exception is where signing wouldn't cost you anything and there's a chance you might want to return to the company in the future. In that case, doing something that doesn't harm you (and is probably not legally enforceable in any case) but buys you some goodwill with the company might not be such a bad idea. If you have no immediate plans to return though, then don't impose this limit on yourself, even if you don't think it will affect you (nobody knows the future). – delinear Nov 5 '18 at 16:20
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    I know you say "in many countries", but those are not the universal elements of a contract. For example "consideration" is not a requirement for a contract in Scotland, and I have a suspicion that it probably isn't in Civil Law countries. – Martin Bonner Nov 6 '18 at 12:33
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    @MartinBonner Which is why I said "many" and not "all." An exhaustive discussion of the ins and outs of contract law in every country would be off-topic here. – Blrfl Nov 6 '18 at 12:45
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There is no reason for you to sign this. You cannot benefit in any way from signing, but you might lose big time if you sign. As a consequence, do NOT sign anything under any circumstances.

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    I wouldn't say "under any circumstances". The company could offer an appropriate amount of money which compensates the OP for signing the non-compete contract. It is, however, very unlikely that the company is interested in providing a level of compensation that is reasonable wrt. the value that the OP is giving up. The OP should also become aware of what is legally permitted/enforceable wrt. non-compete contracts in their jurisdiction. – Makyen Nov 5 '18 at 1:23
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General rule of thumb when you have resigned is to ignore anything that does not palpably benefit you. This would include anything like signing documents.

So unless it includes a mention of recompense then don't enter into any dialogue at all. If you haven't left yet and you're forced to answer you just put it off. If you have left you just ignore it.

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TL;DR

You're under no obligation to do so. There are reasons you might want to, and reasons you might not.


FWIW, they should have handled this a lot earlier, trying to do it now is a bit unprofessional of them. Don't sign anything that isn't significantly time-limited (the longest I've ever seen was five years, which I negotiated down to two; six months is more common in my experience, YMMV). In any case, be polite, and also firm.

Reasons not to sign it

  • It limits your employment options: If you get an employment offer from a direct competitor of theirs, you can't take it. Only you know whether that's a significant limitation or an insignificant one. (I've left jobs where it would have been significant, and also ones where it would have been insignificant.)

  • Hassle: If you take a job with a company you thought wasn't a direct competitor of theirs, but they think it is, they may hassle you about it. ("hassle" could be anything from repeated contacts making you uncomfortable to suing you.)

Reasons to sign it

  • Remaining on good terms: If you've left on good terms, refusing to do this now may harm that.

  • Compensation: They're asking you to do something that may limit your choices; it's perfectly reasonable to ask for compensation for that, though it's hard to imagine getting enough to make it worthwhile, and naturally you'll want to avoid giving them the impression you're blackmailing them. (Negotiating compensation for something like this is not blackmail, but that doesn't affect their perception of it.)

Other Notes

  • These things are usually time-limited. If you decide to do it, make sure it's time-limited in a way you're comfortable with.

  • If you decide not to do it, I'd make a point of doing so very politely. Along the lines of:

    I understand why you'd want that, but I'm afraid I don't think I can. Although I have no specific plans to work for a competitor of yours, and I certainly have no intention of doing anything unprofessional, I need to keep my options open.

    (Obviously, if you've resigned to go work for a competitor, you have to remove the first bit of that.)

  • good answer, however I don't think that word tl;dr means what you think it means ... – mcalex Nov 6 '18 at 8:13
  • @mcalex - :-) Hey, it's just the one paragraph... (Fixed) – T.J. Crowder Nov 6 '18 at 8:21
  • @mcalex sadly nowadays it is actually more or less deemed acceptable to use it to indicate short summaries of longer texts, but it throws me off every time it's the first thing in an answer as well, because i always first wonder why they answered if they didn't read the question, before I realize my mistake ;) – Mark Nov 6 '18 at 10:57
  • To add on @mcalex's comment, TL;DR's might be useful for really long answers. But answers on StackExchange tend to be longer and more in-depth than other platforms. The community likely enjoys this. And also, your answer has all the important things bolded out, which somewhat already makes it a TL;DR. – Daan Nov 6 '18 at 14:20
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    Re: remaining on good terms, declining to sign shouldn't have much of an impact on whether separation from the company is on good terms or not. The manner in which you decline may. You can politely and professionally decline. I'm not sure why your employer wouldn't give an accurate reference or remain a useful professional contact because you politely and professionally declined to sign a noncompete. – De Novo Nov 7 '18 at 17:46
5

While my first instinct agrees with the other question, i.e. "why would you do that?" there is also another way to approach the question:

A contract (and this is a contract) is an agreement between two parties where both parties believe to have an advantage from signing over not signing.

So flat out ask them what they offer you for signing. Such agreements are typically signed at the beginning of an employment relationship, where your advantage is that you get the job and in jobs where the company wants you more than you want them it is usually part of the compensation, or in simple terms, they pay you for it.

Make a simple calculation what the non-compete could cost you in terms of opportunities you must forfeit. If they offer a compensation higher than this, the deal is advantageous for you and you could (but don't have to) sign it. If they offer lower, state factually that their offer is not high enough and refuse.

This shifts the discussion from "stubborn" to "greedy", but greedy is a trait that businesses can deal with. Or in other words: They can solve the problem simply by offering you enough money. And if they don't offer enough, it is not you being stubborn, it is them being cheap.

Approaching the question from this angle allows you to turn the tables on them. Now there's an offer from you on the table and they can take it or refuse it.

  • I like this answer. The worst that can happen is that OP ends up exactly where they are now. – Richard Nov 6 '18 at 18:36
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I recommend negotiating with them.

You may want to negotiate and sign a Non-Disclosure Agreement (NDA) instead. The NDA, says that you won't disclose any of their Proprietary Technology or Intellectual Property to other entities. This protects your previous employer and allows you to work for anybody else, including their competitors.

Hey, it's their issue if they are losing a good team member to the competition. It's also reasonable that you don't disclose their Intellectual Property to their competition.

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    The company has nothing OP wants, so there is no basis for negotiation. They have no leverage. Reject their request. – R.. Nov 4 '18 at 18:31
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    That's a very bold claim, since presumably the company has money, unless you want to suggest Alina doesn't want to be paid at all for anything they do. @R.. – user53718 Nov 5 '18 at 0:48
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    @Nij: Negotiating compensation for a retroactive NDA, rather than for a non-compete, comes awfully close to blackmail. I would not want anything to do with that. I did not read "negotiating" in this answer as asking for compensation, but rather as offering the NDA as a substitute for the non-compete they're asking for, when they're not entitled to either and OP has no reason to give them either. – R.. Nov 5 '18 at 1:11
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    Blackmail would be saying they will release information unless paid. There is clearly no active intent to do so by Alima. Setting a price for the guarantee that they will not (accidentally or otherwise) release secure or privy information later is not at all the same. Negotiation of a contract normally involves any potential compensation - that's what consideration is - and would be required for a legitimate contract to exist, whatever form it happens to take. – user53718 Nov 5 '18 at 2:18
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    @Nij - OP is already done working for them. They don't get to decide to not compensate him/her for work already done. So what money do they have to use as leverage for someone who has already completed all of their work? – PoloHoleSet Nov 5 '18 at 16:38
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You haven't stated in which country you are.

In some countries, law or case law sets requirements for non-compete clauses/contracts.

In France for instance, for a non-compete clause/contract to be valid, it has to:

  • be limited in time, space, and scope
  • include monetary compensation (it should be between one quarter and one half of the average salary)

So check the rules applicable in your own jurisdiction (if you even want to consider the non-compete).

Still, like the others, I would recommend just saying no. At this stage, unless it is really very, very well compensated, you have no reason to do so.

If however you want to agree, make sure that the non-compete includes at least the requirements above (limited in time, space, and scope, and with a monetary compensation). It should all be written down very clearly, and also define precisely what happens if the either party reneges (you start competing, or they stop paying).

When evaluating monetary compensation, weigh very carefully the scope of the non-compete contract. If it prevents you from working at all (because you're very specialised and the clause basically prevents you from working for anyone at all doing the same job, for instance), it should be equivalent to at least your salary for the whole duration of the non-compete contract, probably more as you won't necessarily be able to find a job right away when it ends, and you may have difficulty explaining why you didn't work for that duration, and of course not working also means being less "current" with your job (which for some jobs can really be a carrier-killer).

Once you factor in all that, most companies will just drop the idea of the non-compete.

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In general, when leaving a job, you should not sign willingly and blindy whatever they ask you to sign. Always check documents first, and with time to think it over and talk with a laywer. Ask for a copy beforehand.

Also as for NDAs and non-compete agreements, they are often signed by high-key and very well payed employees at the beginning of contract - think management, very high skilled employees or consultants paid their net weight in gold.

Also, usually a non-compete after leaving should be VERY well compensated.

From the tone of your question, I suppose you are in not any of those cases. I known low-key people that accepted non-compete clauses with a nominal compensation (300-500 Euros) at the beginning of the contract, because they were not experienced and thought it was "normal" - and also because they wanted the job, so beware of what you are doing - there are a lot of non-reputable firms pulling those stunts out there.

Lastly, as other say, it is quite odd you even consider their requests not when starting a job, but when ending. I would tell them to get lost in no uncertain terms.

So to sum it up, unless they are offering you 2 or 3 times your net salary after taxes for the whole duration of the non-compete agreement, there is no sense into even contemplating the idea, and even then.

PS. Such token payments I mentioned earlier is just to strenghten their case in court if the employee tries to invalidate it.

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    Are you seriously suggesting that if someone offered you 2-3 times your regular salary for a period where you don't have to do any work, that you wouldn't accept? Madness. – Numeron Nov 6 '18 at 1:30
  • Depends on age, industry, and other factors. At my age accepting. such a deal for a lengthy period of time would mean I would not get another job until retirement. Ditto for someone inexperienced. – Rui F Ribeiro Nov 6 '18 at 6:26
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    @Numeron why is it madness? For quite some people it is a severe punishment to not be allowed to do any own work during a time period. That's what it is about in this case and not not having to do any work. – mathreadler Nov 6 '18 at 9:57
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    @mathreadler There are other factors. When I changed jobs out of my first job out of University, I increased my salary fivefold overnight. Likewise, after a layover of redundacies and having my salary cut in half, I changed countries and my salary increased more than 10 times - and it were very life enriching experiences. If I had accepted such "deals" on the way out... People without life experience may not understand the immediate gain you have is not everything in the equation. – Rui F Ribeiro Nov 6 '18 at 10:13
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    @RuiFRibeiro It sounds like a nosey style trap. It drains and overshadows everything else of value. – mathreadler Nov 6 '18 at 10:28
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This situation happened to me and several of my coworkers during a layoff. I said this is prim evidence the human resorces department was doing a bad job when they hired all of us. In addition, they also presented us with agreements to hold us liable for moving expenses if we left the company during the first year. We all laughed at that, too late, too bad.

Then the company realized it had made a mistake and asked one lady to return, she blew them off saying she already had a new job. One of the more senior people also had a new job at our competitor's company and walked into a Monday morning meeting and said hello to a dozen admirals and generals by name. He told them this company had a better product and better ethics.

Several of the laid-off employees sued for age discrimination, failure to follow company procedures, and legal slander. They were offered full back pay, benefits, and reinstatement. One man accepted their offer, worked for a week to fully qualify for retirements benefits, and then quit.

Moral of the story: The HR department screwed up and cost the company a lot of money.

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    I understand why the original question may remind you of your relevant story, but it doesn't help to answer the question. Try reading How do I write a good answer? in the help section to get some tips and a better explanation of what would be more helpful to the OP. If you face any such scenarios in the future, Workplace would be a good place to seek advice. – Engineer Toast Nov 6 '18 at 13:42

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