Business Development Managers and management operations positions have access to sensitive business critical information on clients and contracts.  It is important for businesses to protect this vital business data in the event of staff members moving on to new employers.  A common method of doing this is through the inclusion of Non Competition clauses in contracts.  This week’s HR Highlight will explore the essentials of the Non-Competition Clause.

The contract

Non-Competition Clauses that are included in the contract need to be clearly articulated, reviewed regularly and justifiable in their harshness.

It is important to communicate to the employee what they are excluded from, for how long, from what date and what will be the repercussions for a breach of this clause.  It is also important that the contract notes that this clause is to survive past the dissolving of the employment relationship.

For most businesses a general “will not enter the employment of a direct competitor in the XYZ industry for a period of X months” will suffice.  However, it is advantageous to be as specific as possible.  Listing geographic areas, and multiple industries if appropriate.

The term of exclusion should be based on the level of impact on the business, with lower level employees at a shorter exclusion period.  There is no hard and fast rule but most Non-Competition Clauses are in the 6-12 month range.

The data

It is also important to ensure that the contract and the exit procedure ensure that all company data is protected.  The deliberate transfer via electronic or other means of client lists etc should be strictly and explicitly prohibited within the contract.

Confirmation

If businesses wish to include a Non-Competition Clause into a contract that has not had it previously it is convenient to do this upon the annual review of the position and as part of a Letter of Engagement.  The Letter of Engagement is much like the original Letter of Offer and outlines the terms and conditions of the employment relationship.  See more on Letters of Offer and Letters of Engagement.

Here to Help

ACAPMA members are reminded that ACAPMAlliance has a series of resources from Quick Reference Guides to template letters and investigation and reporting checklists that can assist with ensuring compliant and consistent responses in this area, and can call on the advice and support of the ACAPMAlliance Workplace Relations Professionals on 1300 160 270.

HR Highlights are things to consider, implement and watch out for in your business.

They are provided as general advice and you should seek further advice on your situation by  calling 1300 160 270 and speaking to one of ACAPMA Workplace Relations Professionals it’s free for members.

ACAPMA Membership is affordable at only $770 per year for a single site and valuable with sites gaining HR advice support and representation as well as a raft of other benefits and discounts.  Click here to learn more about ACAPMA Membership.

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