Employee Bond for Non Compete

What is Employee Bond for Non Compete?

Employee Bond for Non-Compete is an agreement between two parties typically an employer and an employee, wherein employee agrees not to enter into or start a similar trade or profession in competition or use information learned during employment, against the employer.

Why is Employee Bond for Non Compete required?

The objective behind employers usually insisting on the non-compete agreements is because there is a  possibility where an employee, upon his termination or resignation may start a business or work for a competitor or gain competitive advantage by abusing the confidential information about their former employers trade secret or sensitive information like market plans or customer details etc.

What should a Employee Bond for Non Compete cover?

 

A non-compete agreement between an employer and an employee usually contains the obligation of the party being bound to not compete with the binding party for a particular duration of time. Non-compete agreements overall must be both fair and equitable for all parties. They require certain information in order to be considered legally binding:

• An effective date on which the agreement will begin.

• A reason for enacting the agreement.

• Specific dates during which the employee will be barred from working in a competitive sense and the location covered by the agreement.

• Details as to how the non-competing party will be compensated for agreeing to the terms.

Format for Employee Bond for Non Compete

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DRAFT OF EMPLOYEE BOND OF NON-COMPETE





By this Bond Mr. A residing at ... binds himself to pay to Mr. B the sum of Rs... as liquidated damages.

WHEREAS A is a qualified ............ employed by B in his factory manufacturing some ............. viz. ………........ and in the course of employment Mr. B may come to know the secret........... adopted by B in the manufacture of such products.

AND WHEREAS as per the terms of employment A has promised to B not to misuse his position by disclosing to any person the knowledge acquired by him in the manufacture of the said products and has agreed to execute this Bond.

 AND WHEREAS however, in the event of A misusing his position as herein stated, he has at the request of B agreed and hereby agrees to make good the loss by paying him the said B a sum of Rs ...... as compensation.

NOW the condition of this bond is that if during the course of employment of Mr. A with Mr. B, the said A will work faithfully and honestly and shall not disclose to any person the knowledge he may get regarding the manufacture of the said products and the formulae or manufacturing process thereof and shall not,after he ceases to be the employee of Mr. A due to his resignation or dismissal or removal or for any reason whatsoever, carry on any business similar to the business of manufacturing the said products or medicines or work with any other manufacturer carrying on similar business, either as an employee or on ad hoc basis or partially or otherwise directly or Indirectly within the city of... and for a period of ......years from the time he ceases to be in the service of the said B then this Bond will become void and of no effect but otherwise it will remain in full force and effect.

In WITNESS, WEREOF the said Mr. A has put his hand this day ...

Signed and delivered by the

withinnamed Mr.………….

WITNESSES;

1.

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Documents Required for Employee Bond for Non Compete

No specific documents are required to execute or make a non-compete agreement. However, to validate the agreement, one must scrutinize the identity proofs of both parties in order of verifying the names and addresses of the parties. One must also verify that the agreement contains all the necessary clauses required.

Procedure for Employee Bond for Non Compete

There is no specific procedure applicable to the execution of the employee bond for non-compete. However, it is always recommended to consult a lawyer before drafting a non-compete bond with all the necessary details as stated above. Once the bond is drafted it should be thoroughly analyzed by the executor and should be executed as per the guidance received from the lawyer. The rules related to registration of the bond must also be followed while executing, as may be applicable as per the prevalent laws.

Legal Considerations for Employee Bond for Non Compete

A person executing a non-compete agreement must make sure that both parties have the legal authority to enter into the agreement. Both the parties executing the bond must be of legal age to sign the bond and must do so without coercion or any undue influence. The parties signing the bond must be sane at the time of execution and should do so in the presence of witnesses.

How can a lawyer help to draft Employee Bond for Non Compete?

While drafting bonds, it is important to know as to what terminology should be used while drafting the same as a small ambiguity in the terms can also jeopardize the claim of the parties. This is why it is crucial to have a documentation lawyer to assist you with the drafting of the bond. Being an expert in the area of documentation law, a documentation lawyer knows the nitty-gritty of the legal procedures and the requirements involved in drafting a bond. With the experience attained in the field, he/she can guide you with the right advice while entering into a bond and can make sure that such mistakes are eliminated that cannot be resolved even through further legal procedures.

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