On entrenched employees, exasperated employers, and restricting re-employment: part 4.

In the previous parts,¹ I discussed how employers can use non-compete clauses effectively, and options which are open to employees.

I end off with some big-picture thoughts about non-compete clauses, and what the future holds.

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1⃣ Non-compete clauses are not necessarily evil.

(Controversial, I know!)

But I say this as a lawyer who represents both employers AND employees.

While most employees see non-compete clauses as placing unwanted fetters on their future options, many employers see such clauses as a logical tool to protect their interests.

They both have a point.

So I suggest that it's too simplistic to adopt a binary view that non-compete clauses are inherently good or evil.

Rather, they are just one of the many contractual terms that should be properly considered before entering into an employment relationship, and both employers and employees should not simply skim over them.

2⃣ Employers must be prepared to pay the price for using non-compete clauses.

My anecdotal experience is that employers who seek to impose non-compete clauses:

a) tend to face more challenges hiring, especially for high-level or strategic roles.

Often, candidates turn down such roles because they are not prepared to be bound by such restrictions.² And these are precisely the roles for which the competition for talent is fierce;

b) have to devote more resources towards employee management and retention.

I'm not just talking about fielding queries from employees about non-compete clauses. Rather, the imposition of such clauses increases the chances of employees viewing the employment relationship as an adversarial one.

Now, if this is something that the employer has already priced in as part of the cost of doing business - it's not for me to judge.

But I suggest that not many employers in not many industries can put in additional resources to manage employee discontent without feeling any pain; and

c) will have to incur legal costs to enforce non-compete clauses.

A clause that an employer is unwilling to enforce loses much of its utility. So the employer must be prepared to pay the price of enforcement.³

If not, employees may well start to chitter about whether the clause is even enforceable. This places the employer in a more difficult position compared to the situation where the clause was never included in the first place.

3⃣ The law on non-compete clauses will continue to evolve.

The current legal position will not necessarily hold in the future.

In particular, I predict that the Courts will explore and clarify what exactly constitute "reasonable" restraints in a variety of industries and roles.

As such, do ensure that your legal advisors stay up-to-date with the law, and not simply give you the same cookie-cutter answers they've been giving for the last decade.