This clause (also called a "non-compete" or "restraint of trade" clause) restricts what you can do after you leave the job—for example, you might not be allowed to work for competitors or start a rival business for 12 months. It matters because English courts will only enforce these if they're "reasonable"—meaning they protect the employer's legitimate business interests without unfairly blocking your career. US courts vary by state; California almost never enforces them, but Texas and New York often do. For example, a clause saying "you can never work in retail again, anywhere" would be unreasonable and unenforceable, but "you can't work for our direct competitors within 5 miles for 6 months" might be reasonable.
Negotiate the scope, duration, and geography to be as narrow as possible. Instead of "cannot work for any competitor," try "cannot solicit our existing customers" (which is usually enforceable). Reduce the time: 6 months is better than 2 years. Add geographic limits: "within 10 miles of our office" rather than "anywhere in the country." Get it in writing that if the clause is found unreasonable, a court can reduce it rather than strike it out entirely. If the employer won't negotiate, ask a lawyer in your state/country to review it—some are unenforceable and you need to know before you sign.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause (also called a "non-compete" or "restraint of trade" clause) restricts what you can do after you leave the job—for example, you might not be allowed to work for competitors or start a rival business for 12 months.
Why should I care about this clause?
It matters because English courts will only enforce these if they're "reasonable"—meaning they protect the employer's legitimate business interests without unfairly blocking your career.
What are my options?
US courts vary by state; California almost never enforces them, but Texas and New York often do.
How does this affect small businesses?
For example, a clause saying "you can never work in retail again, anywhere" would be unreasonable and unenforceable, but "you can't work for our direct competitors within 5 miles for 6 months" might be reasonable.