Restrictive covenants are the terms and conditions that are implemented by the employer for the employees in a company and these guidelines allow the employer to control the flow of information and business secrets outside the organization by the employees during their employment and after they leave the company. The agreement that is signed by the employer and employees in order to conduct and implement these rules and regulations is known as the restrictive covenants for employment agreement.
Brief Description of Restrictive Covenants for Employment Agreement:
There are certain things about each company and organization that the owners and partners don’t want to share with the outsiders and competitors. This can be trading secrets, business technologies, tactics, new inventions, intellectual properties or details of clients associated with a company. It is very much possible that even if the company wants to keep this type of information secret and asks the employees not to share such specifics with anyone else outside the company, someone will break the rules and there will be a leak in the market. In order to keep that from happening and eliminating the possible leaks, employers ask their employees to sign this agreement with the company so that even if they want, they can’t share the restrictive information and top level secrets with competitors or other potential assets that are interested to know these secrets.
Most of the time companies fear that some information will be leaked to the competitors by the employees that have left the company for some reason. For example, your company handles a huge number of clients and only your sales executives know why these clients are loyal to your company; because you understand their needs and provide what they want to get from you. If this information gets out in the market, every competitor will try to grab it and use it to acquire those clients for their businesses. Now assume that some of your employees are going to leave the company and the competitors know these employees know a lot about your clients so these employees will be approached by the other companies in the market and they will be offered good benefits in exchange of this information about your clients. In this situation, if you have signed this agreement with your employees, they are forced to keep that information hidden from their future perspective employers and not to use it against their previous employer or his company.
Key Elements to add in the Restrictive Covenants for Employment Agreement:
- Name of the employer/company
- Name of the employee who is joining the company
- Position on which the employee is appointed
- Terms and conditions of the agreement
- Mutually agreed clauses of the agreement
- Pay scale of the employee
- Percentage increase in the salary per annum
- Additional benefits i.e. insurance, medical, dental, travelling
- Promotion process for the employee
- Validation of the employment (if applicable)
- Termination of the agreement
- Results of violation of the agreement
- Additional details (if any)
- Signature of employer and employee
Free Restrictive Covenants for Employment Agreement Templates
Download all these Free Restrictive Covenants for Employment Agreement Templates that can easily help you to prepare your own Restrictive Covenants for Employment Agreement effectively.