Building A Fulfilling Career
Reflections On Non- Compete Clauses And The Challenges Of Enforcement
By Ernestilla Bahati
Non-compete clauses are clauses that restrict employees from competing with their employers after their employment ends .
These clauses generally prohibit the employee from working for a competitor , starting a competing business , or soliciting the employer ' s clients or other employees after the termination of their employment . These clauses are designed to protect business interests and prevent the loss of valuable information and or clients .
Non-compete clauses typically include a specified period during which the employee is restricted from competing with their former employer . Additionally , some clauses define a specific geographical area , limiting the restriction to a particular region .
Non-compete clauses are among few types of clauses in a contract that survive the said contract . In simpler language , this means that non-compete clauses remain valid even after expiry or termination of a Contract of employment .
Enforceability of a non-compete clause remains an unchartered territory , especially in Tanzania . Many employers choose not to pursue to enforce said clauses in circumstances where employees have breached the same . In the rare instances where employers pursue former employees for breaching non-compete clauses , courts evaluate the fairness and reasonableness of these clauses before allowing enforcement .
The common test applied is whether the said non-compete clause provides for a specific duration within which the said restriction would apply , or whether it limits the geographical location where such restrictions would be applicable .
Tanzanian laws remain silent on this Matter . My research has also revealed that our Courts have not yet adjudicated on any matter that involves enforceability of non-compete clauses in Contracts of employment .
In Kenya , Contracts in Restraint of trade Act , Cap 24 of the Laws of Kenya regulates non-compete clauses . The Act essentially stipulates that , restrictive clauses , such as non-compete clauses , shall not be considered void solely due to the restriction they impose and goes further to bestow power upon the High Court of Kenya to declare such clauses as void , if it finds the same unreasonable .
The said Act further provides that a noncompete clause will become automatically void in a situation where an employer terminates a Contract of employment in contravention of the terms of the said Contract .
These clauses , particularly in employment contracts , can severely limit someone ' s capacity to make a livelihood . When not carefully crafted , these clauses can detrimentally affect a professional ' s earning potential .
Before signing a Contract of employment , it is important to first read and understand all the terms of such Agreement . If the Contract contains a non-compete clause , it is necessary to ensure that the said clause is structured in a way that is fair and reasonable . Restricting one from working with competitors for an indefinite period of time after termination of the employment contract is not only unfair , but completely unreasonable .
In circumstances where the terms are unfair , it is necessary for one to negotiate to change the clause and ensure that it is structured in a way that is fair for both parties ie the employer and employee .
Wouldn ' t it be beneficial to channel more effort into confidentiality clauses ? When crafted correctly to safeguard an employer ' s trade secrets indefinitely , what real purpose would non-compete clauses serve ?
Conclusion
It ' s important to strike a delicate balance between safeguarding the intellectual property of employers and ensuring that professionals can earn a living justly and equitably . Would one be wrong then , to take the position that , non-compete clauses serve as a means for employers to exert control and create complexities in the professional lives of employees following the termination of employment contracts ?
Perhaps it would be more beneficial to direct greater attention towards Non- Disclosure Agreements or confidentiality clauses , instead of emphasizing noncompete clauses . If clients express a desire to follow an employee , there ' s likely a significant rationale behind it . If an employee wishes to join a competitor , provided they adhere to strict confidentiality regarding trade secrets , why impose limitations ? Instead , why not concentrate on cultivating competitive environments within the workplace to foster lower employee turnover rates , rather than restricting employees ' rights to seek employment elsewhere , even with competitors ? Just my two cents .
Ernestilla Bahati is the Senior Litigation Partner at AVC and Partners Advocates . She has effectively advocated for both corporate entities and individual clients in a myriad of cases , encompassing Civil , Employment , and Commercial Litigation . You can commune with her via email at : Ernestilla @ avcpartners . co . tz
44 MAL60 / 24 ISSUE