I'm currently leaving a company but they want me to sign a non-compete before leaving.
I don't have any formal contract with the company nor anywhere did I sign that I would commit myself to it.
Is there any benefit for me in doing so? Why would I want to do this?
No. You gain nothing by signing and potentially limit your employment options by agreeing to the non-compete. By rights, if they were acting legitimately they would have had you sign one as part of your initial employment conditions before you even started the job. This is retrospective CYA nonsense and you should treat it as such.
If they really want you to sign, ask for a bonus in return for potentially limiting your employability. Otherwise just walk away
The non-compete agreement you're being asked to sign is a contract. In many countries, forming an enforceable contract requires all five of the following:
The contract your company proposes has lots of consideration for them (they get the benefits of not having a former employee at a competitor) and none for you. Because they are offering you nothing in return for staying out of their industry, you have no incentive to accept what they propose. The time to have done that would have been when they were offering you a job in the first place.
The easiest route would be to reject their offer outright. You've resigned, so all they can really do at work is terminate your employment early. The worst they could do after you leave is file a malicious suit for misappropriating their trade secrets. Even if they don't win, you still lose because defending yourself will cost money and time, but they still run the risk of an expensive countersuit.
Negotiating fair consideration would require that you figure out what you would lose by abiding by their terms. If signing would force you to take a position in another field that doesn't pay as well, you should demand the difference or, if you can't work at all because of it, the full value of your salary and benefits. If the company was dumb enough to try this as you were leaving, I'd penalize them at least 25% additional to make sure they really want you out of circulation, but that's just how I do business. Whatever goes into the agreement, the consideration has to last the full duration of the time you're out of circulation and should either be paid up front or, if they stop paying you, the contract becomes void. (All of this takes time and money to arrange and is why it's easier to simply decline their offer.)
There is no reason for you to sign this. You cannot benefit in any way from signing, but you might lose big time if you sign. As a consequence, do NOT sign anything under any circumstances.
General rule of thumb when you have resigned is to ignore anything that does not palpably benefit you. This would include anything like signing documents.
So unless it includes a mention of recompense then don't enter into any dialogue at all. If you haven't left yet and you're forced to answer you just put it off. If you have left you just ignore it.
You're under no obligation to do so. There are reasons you might want to, and reasons you might not.
FWIW, they should have handled this a lot earlier, trying to do it now is a bit unprofessional of them. Don't sign anything that isn't significantly time-limited (the longest I've ever seen was five years, which I negotiated down to two; six months is more common in my experience, YMMV). In any case, be polite, and also firm.
It limits your employment options: If you get an employment offer from a direct competitor of theirs, you can't take it. Only you know whether that's a significant limitation or an insignificant one. (I've left jobs where it would have been significant, and also ones where it would have been insignificant.)
Hassle: If you take a job with a company you thought wasn't a direct competitor of theirs, but they think it is, they may hassle you about it. ("hassle" could be anything from repeated contacts making you uncomfortable to suing you.)
Remaining on good terms: If you've left on good terms, refusing to do this now may harm that.
Compensation: They're asking you to do something that may limit your choices; it's perfectly reasonable to ask for compensation for that, though it's hard to imagine getting enough to make it worthwhile, and naturally you'll want to avoid giving them the impression you're blackmailing them. (Negotiating compensation for something like this is not blackmail, but that doesn't affect their perception of it.)
These things are usually time-limited. If you decide to do it, make sure it's time-limited in a way you're comfortable with.
If you decide not to do it, I'd make a point of doing so very politely. Along the lines of:
I understand why you'd want that, but I'm afraid I don't think I can. Although I have no specific plans to work for a competitor of yours, and I certainly have no intention of doing anything unprofessional, I need to keep my options open.
(Obviously, if you've resigned to go work for a competitor, you have to remove the first bit of that.)
While my first instinct agrees with the other question, i.e. "why would you do that?" there is also another way to approach the question:
A contract (and this is a contract) is an agreement between two parties where both parties believe to have an advantage from signing over not signing.
So flat out ask them what they offer you for signing. Such agreements are typically signed at the beginning of an employment relationship, where your advantage is that you get the job and in jobs where the company wants you more than you want them it is usually part of the compensation, or in simple terms, they pay you for it.
Make a simple calculation what the non-compete could cost you in terms of opportunities you must forfeit. If they offer a compensation higher than this, the deal is advantageous for you and you could (but don't have to) sign it. If they offer lower, state factually that their offer is not high enough and refuse.
This shifts the discussion from "stubborn" to "greedy", but greedy is a trait that businesses can deal with. Or in other words: They can solve the problem simply by offering you enough money. And if they don't offer enough, it is not you being stubborn, it is them being cheap.
Approaching the question from this angle allows you to turn the tables on them. Now there's an offer from you on the table and they can take it or refuse it.
You haven't stated in which country you are.
In some countries, law or case law sets requirements for non-compete clauses/contracts.
In France for instance, for a non-compete clause/contract to be valid, it has to:
So check the rules applicable in your own jurisdiction (if you even want to consider the non-compete).
Still, like the others, I would recommend just saying no. At this stage, unless it is really very, very well compensated, you have no reason to do so.
If however you want to agree, make sure that the non-compete includes at least the requirements above (limited in time, space, and scope, and with a monetary compensation). It should all be written down very clearly, and also define precisely what happens if the either party reneges (you start competing, or they stop paying).
When evaluating monetary compensation, weigh very carefully the scope of the non-compete contract. If it prevents you from working at all (because you're very specialised and the clause basically prevents you from working for anyone at all doing the same job, for instance), it should be equivalent to at least your salary for the whole duration of the non-compete contract, probably more as you won't necessarily be able to find a job right away when it ends, and you may have difficulty explaining why you didn't work for that duration, and of course not working also means being less "current" with your job (which for some jobs can really be a carrier-killer).
Once you factor in all that, most companies will just drop the idea of the non-compete.
I recommend negotiating with them.
You may want to negotiate and sign a Non-Disclosure Agreement (NDA) instead. The NDA, says that you won't disclose any of their Proprietary Technology or Intellectual Property to other entities. This protects your previous employer and allows you to work for anybody else, including their competitors.
Hey, it's their issue if they are losing a good team member to the competition. It's also reasonable that you don't disclose their Intellectual Property to their competition.
In general, when leaving a job, you should not sign willingly and blindy whatever they ask you to sign. Always check documents first, and with time to think it over and talk with a laywer. Ask for a copy beforehand.
Also as for NDAs and non-compete agreements, they are often signed by high-key and very well payed employees at the beginning of contract - think management, very high skilled employees or consultants paid their net weight in gold.
Also, usually a non-compete after leaving should be VERY well compensated.
From the tone of your question, I suppose you are in not any of those cases. I known low-key people that accepted non-compete clauses with a nominal compensation (300-500 Euros) at the beginning of the contract, because they were not experienced and thought it was "normal" - and also because they wanted the job, so beware of what you are doing - there are a lot of non-reputable firms pulling those stunts out there.
Lastly, as other say, it is quite odd you even consider their requests not when starting a job, but when ending. I would tell them to get lost in no uncertain terms.
So to sum it up, unless they are offering you 2 or 3 times your net salary after taxes for the whole duration of the non-compete agreement, there is no sense into even contemplating the idea, and even then.
PS. Such token payments I mentioned earlier is just to strenghten their case in court if the employee tries to invalidate it.
This situation happened to me and several of my coworkers during a layoff. I said this is prim evidence the human resorces department was doing a bad job when they hired all of us. In addition, they also presented us with agreements to hold us liable for moving expenses if we left the company during the first year. We all laughed at that, too late, too bad.
Then the company realized it had made a mistake and asked one lady to return, she blew them off saying she already had a new job. One of the more senior people also had a new job at our competitor's company and walked into a Monday morning meeting and said hello to a dozen admirals and generals by name. He told them this company had a better product and better ethics.
Several of the laid-off employees sued for age discrimination, failure to follow company procedures, and legal slander. They were offered full back pay, benefits, and reinstatement. One man accepted their offer, worked for a week to fully qualify for retirements benefits, and then quit.
Moral of the story: The HR department screwed up and cost the company a lot of money.
Noncompeats are only realy ever used for senior or very highly paid jobs
– Neuromancer Nov 04 '18 at 18:45