When a business relationship ends, it’s not uncommon for individuals to take what they’ve learned and use it elsewhere. A Non-Compete Agreement protects your company from the risk that a former employee, contractor, or partner will use confidential information, client relationships, or industry insight to compete directly with you.

These agreements are particularly important in sectors where know-how, strategy, and client trust are essential to maintaining a competitive edge.

What is a Non-Compete Agreement?

A Non-Compete Agreement is a legally binding contract between a business (the Protecting Party) and an individual (the Restricted Party) in which the individual agrees not to enter into or start a similar profession or trade that competes with the business, usually for a specified period and within a defined geographic area after their relationship ends.

This agreement helps maintain business continuity by shielding confidential methods, protecting customer bases, and preventing disruption from unfair advantage.

A Non-Compete Agreement is appropriate when:

• Employees are leaving your company and have access to valuable clients, trade secrets, or know-how
• Freelancers or contractors have worked closely with your team and gained insight into your operations
• You’ve sold or acquired a business and need assurances the seller won’t set up shop nearby
• You’ve terminated a partnership and want to prevent one party from poaching staff or clients

The key is ensuring that the agreement is reasonable, proportionate, and enforceable under the governing law.

What Makes a Non-Compete Clause Enforceable?

In the UK, non-compete clauses (also known as restrictive covenants) are enforceable only if they are reasonable in scope and necessary to protect a legitimate business interest.

English courts have been cautious when assessing such clauses, as they are considered a restraint of trade and therefore presumed unenforceable unless justified.

To be upheld, a non-compete clause must meet three key tests:

1. Protection of Legitimate Business Interests

The clause must aim to protect legitimate interests such as:

• Client or customer relationships
• Confidential information or trade secrets
• Stability of the workforce (e.g. preventing poaching)

Simply seeking to prevent competition or restrict someone’s ability to earn a living is not considered a valid justification.

2. Reasonableness in Duration, Scope, and Geography

Courts will consider whether the clause is no wider than reasonably necessary:

• Duration: Typically, up to 6–12 months is acceptable. Anything longer is more likely to be struck out unless justification is shown.
• Geographic Scope: Restrictions must relate to areas where the employer actually operates. Nationwide or global restrictions are unlikely to be upheld unless the business genuinely operates at that scale.
• Activity Scope: The clause must only restrict activities that would genuinely harm the business. For example, a clause preventing an ex-employee from working in any sector or role is excessive. However, limiting work for direct competitors or targeting existing customers may be considered reasonable.

3. Clear and Precise Wording

The clause must be clearly drafted and unambiguous. If it is vague or overly broad, the court will not rewrite it, it will simply declare it unenforceable.

Practical Example

A clause that prevents a former sales manager from soliciting clients they dealt with, within a 10-mile radius of the employer’s office, for a period of 6 months, is more likely to be upheld. On the other hand, a clause attempting to stop the same individual from working in any sales-related role across the UK for 2 years would almost certainly be unenforceable.

What Happens If You Don't Use a Non-Compete Agreement?

Without a non-compete in place, former collaborators can:

• Set up directly next to you, offering similar services
• Approach your clients or suppliers using insider knowledge
• Use your pricing strategy, tools, or documents to gain an unfair advantage
• Train competitors using your processes

This can result in lost revenue, damaged client relationships, and reputational harm. Worse still, you may have no legal grounds to stop it if the information wasn’t protected contractually.

Non-Compete Agreement Free Template 

This Non-Compete Agreement (“Agreement”) is made and entered into on [Date], by and between:

(1) [Company Name], a company incorporated in [Country], with Company Number [Number], and having its registered office at [Address] (the “Protecting Party”); and

(2) [Name], an individual residing at [Address] (the “Restricted Party”).

Collectively referred to as the “Parties”.

WHEREAS, the Protecting Party wishes to protect its legitimate business interests, and the Restricted Party acknowledges that they may have access to [Specify. E.g. confidential information/trade secrets] during the course of their relationship with the Protecting Party;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Parties agree as follows:

1. Non-Compete Obligation

The Restricted Party agrees that for a period of [specify] following the termination of their relationship with the Protecting Party, they shall not, within [Specify Area], directly or indirectly [Specify] that competes with the Protecting Party’s business as it existed during the term of their relationship.

2. Reasonableness of Restrictions

The Parties agree that the restrictions contained in this Agreement regarding time, geography, and scope of activities are fair, reasonable, and necessary to protect the legitimate interests of the Protecting Party.

3. Confidentiality

The Restricted Party agrees to maintain the confidentiality of all proprietary, technical, financial, or business information obtained during the course of their engagement with the Protecting Party and shall not disclose such information to any third party or use it for personal benefit.

4. General Provisions

• No amendment or modification shall be valid unless in writing and signed by both Parties.
• Any disputes shall first be negotiated in good faith. If unresolved within [Number] days, disputes shall be referred to arbitration under the rules of a recognised arbitration body. Arbitration shall be conducted in [Language] and take place in a mutually agreed location.

5. Governing Law and Jurisdiction

This Agreement shall be governed by the laws of the [Country]. The courts of [City, Country], shall have exclusive jurisdiction over any disputes arising from this Agreement.

Create a Non-Compete Agreement in Minutes with Bind

Bind lets you generate professional, legally correct Non-Compete Agreements tailored to your situation. Simply answer a few questions about your business and the scope of the restriction, and Bind produces a ready-to-sign agreement that protects your interests without overreaching.

Whether you're hiring, contracting, or ending a business relationship, Bind ensures you remain protected—without the legal complexity.