You are developing a new project: you are still an employee in a firm or getting in a partnership with people who are still employed. It isn’t easy to leave a company to launch your own business. You mustn’t forget the obligations that bind you to your current employer.
1. Differences between a non-disclosure and a non-competition clause
The first contract you should check is your employment contract. We will focus more specifically on the “non-competition” clause it might entail, i.e. the provision that allows your employer to prevent you from competing with him. You should know that “non-disclosure” and “non-competition” obligations are often quite similar. That being said, these provisions mean different things and have different consequences. How do we tell them apart? Here are some elements that will help you identify them.
- the non-disclosure clause prohibits you from communicating information (e.g. skills) to third parties, therefore preventing you from using the information you were given in your job, in order to develop your project.
- the non-competition clause, on the other hand, prohibits you from using what you have learnt, particularly in creating your own business in the same field.
- the non-disclosure clause can be applicable during your contract and after its termination.
- the non-competition clause however is only applicable after termination of your contract.
In practice, the wording of these provisions is ambiguous, which makes them hard to tell apart. For instance, in an employment contract, is a provision that prohibits you from “allowing any competing business to benefit, directly or indirectly in whatever form, from the knowledge gained during your employment” a non-disclosure or a non-compete provision? It would appear to be a non-disclosure obligation and not a non-compete obligation.
2. Claiming a non-competition provision is invalid
Now that you can identify your obligations, let’s say that what you observed poses a problem: you have identified a non-competition clause and you need to challenge it in order to launch your activity under the best possible conditions. To be valid, a non-compete clause must meet three conditions. It must be:
- justified by the nature of the task,
- proportionate to the goal (limited in its duration and geographical scope)
- imposed solely to full-time employees
- and be financially compensated.
We will carefully read your employment contract again: is there a non-disclosure or a non-competition provision? Are these provisions valid? We can help you solve these issues before facilitating the launch of your project.