Non compete clauses in C-Suite executive employment contracts: The dos and don'ts

economictimes.indiatimes.com:

In this article, we speak to Dr. Somdutta Singh, Serial Entrepreneur, Founder and CEO Assiduus Global Inc, LP Angel Investor, Advisor Govt of India (Core Committee Member of WEP- Niti Aayog) to understand one such clause: the non-compete clause in the employment contracts of C-Suite executives.

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Here is a short explainer based on Dr. Singh’s inputs:

What is the non-compete clause in the employment contract?

Let us first understand what this is and why it matters.

A non-compete agreement is a contractual arrangement between an employer and an employee, aiming to restrict the employee from utilizing information acquired during their employment for competitive purposes. It is a contractual agreement that restricts an employee's professional activities post-employment, particularly in terms of working for a direct competitor or establishing a similar business within a specified timeframe and geographic area.

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The reason it is in place could stem from reasons of confidentiality given the seniority of the positions and the resultant access to critical company information.

What is the possible impact of this?

The impact of breaching a non-compete clause is multifaceted. It may result in legal repercussions, damage to professional reputation, and also lead to severe financial penalties. Moreover, it can hinder a CXO’s career prospects and strain relationships with former colleagues and employers.

How