The Moscow Times
by Pepeliaev, Goltsblat Partners and Yury Ivanov

A non-compete clause or covenant not to compete is a term used in contract law meaning that one party (usually an employee) agrees not to pursue a similar profession or trade in competition with another party (usually the employer).

Such clauses are used because employees might, when they are dismissed or resign, or simply in breach of their contract, begin working for a competitor or start up their own business, consequently gaining an advantage by abusing confidential information about their former employer's operations or trade secrets, or any confidential information about, for example, customers and clients, business practices, marketing plans, etc. Thus, non-compete agreements are becoming an increasingly popular way for employers to try to limit employees and former employees in working for a competitor or divulging trade secrets, confidential information or other proprietary data.

On the other hand, a business might abuse a non-compete clause to prevent an employee from working elsewhere at all and thus to retain the employee on his own staff. Most non-compete clauses are signed either with little or without any negotiation between the employer and the employee. They are usually signed when the employee is initially hired and may have very little bargaining skill and power and the employee is generally concerned about limitations on his future employability. Yet, as soon as the employee decides to resign, the non-compete agreement may constitute a significant impediment to future employment or may prevent employees from becoming self-employed.

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