A non-compete clause in an employment contract restricts a current employee from competing with their employer in the same or similar area of business as the employer.
Some examples are:
- If H is in the business of manufacturing air purifiers with a specific technology then its employee Y cannot start a rival business with the same technology.
- Harpeet Singh Bedi is a salesman at AYS Computers, with whom he has a non-compete clause. If Harpeet starts a business, Rocket Sales Corporation, which is similar to AYS, while still in AYS’s employment, he is violating the terms of his contract and may be sued, as the clause specifically forbids him from doing so.