Non-Compete Contract: Valid and Enforceable?

One of the terms in our various contracts of employment is the non-compete Clause. What exactly is a non-compete clause?

A non-compete clause is a clause in a contract that restrains you from working for your employer’s competitor in the future. It is also known as a “contract in restraint of trade”. 

In most contracts of employment, you see clauses like:

The employer expressly agrees that, at all times during his employment with XYZ Limited and for a period of XYZ years immediately following the termination of this contract, he will not directly or indirectly engage in or own or operate a part or all of any business that is competitive with XYZ limited or any of its affiliates pursuant to his employment under this Agreement or any extension thereof.

So are non-compete clauses, like this above valid and enforceable?

Nigerian Courts are not always favorable to blanket non-compete clauses. The argument is because it is purely against public policy to restrain you from using your skill and knowledge acquired by virtue of your education, experience and intelligence to advance your career. This means that most standard and seemingly iron clad non-compete clauses like that above will not see the light of the day in court and will be considered invalid. This is so, even if the employee has signed the Contract before the resumption of employment.

So how do you make a standard non-compete enforceable.

First, it must be supported by a consideration. I mean, it makes sense that if you want to restrain an employee from using his knowledge, skill and expertise, it must be for a consideration. You must put a value to that restraint. How then is he to survive and fend for himself?

It must be reasonable with regards to duration and geographical limitation. Again, you can’t restrain an employee from working for a competitor forever, worldwide, or even within Nigeria.

There must be a legitimate business interest to protect. More like restraining someone with knowledge of your trade secrets from working for a competitor.

Finally, please consult your Lawyer to properly guide you on how to draft a comprehensive non-compete that will stand the test of validity and enforceability.