What is a non-solicitation agreement?
By Paris Tamang, Date published: 2022-10-29
Businesses work hard to maintain their clientele. They invest a lot of time, energy, and money into building and maintaining it. For them, it is an asset with great value in itself. However, a large part of this process is played by employers who work to build the company’s brand and build relationships with the clients by representing the company. While this relationship building can be quite useful for a company, it can easily backfire if an employee decides to walk away with the clients or even vendors for themselves. Hence, it is important for businesses to keep their data and information safe. Get answers to all your questions like types of Non-Solicitation Clauses, What is a non-solicitation agreement?, are Non-Solicitation Non-Competes the same? ,Direct Vs Indirect Solicitation etc in this article.
A nonsolicitation agreement is used for a certain period of time in cases where employers want to ensure that the information held by employees will not be solicited by them. For instance, agencies have multiple key personnel or managers handling their clients and portfolios on their behalf, and these people have access to private and confidential information. Getting them to sign a solicitation agreement will safeguard the valuable information that the company holds so the employers cannot use it for their benefit or for the benefit of a competitor after leaving the company.
Apart from this another key restriction that a nonsolicitation agreement place is with regards to not soliciting other employees to quit when the employee in question quits themselves or moves on to other opportunities. It is also important to note that non-solicitation agreements should specify how long the restriction is applicable. This is crucial as the implications of the agreement are not forever.
When is a non-solicitation agreement used?
Non-solicitation is usually a clause that is used as a part of a larger document such as Employment Agreements, NDAs, Terms of Conditions, Contractor Agreements, Settlement Agreements, and others. However, it can be an independent agreement on its own as well. It is used to protect the interest of a business by preventing former employees from taking a company’s resourceful information, clients, and manpower.
For example, if a company wants to protect its list of vendors, it could use a standalone nonsolicitation agreement or employers could ask employees to sign a nonsolicitation agreement when they are hired.
Are Non-Solicitation and Non-Competes the same?
Non- Solicitation, and Non- Compete is two different things. A non-solicitation agreement prevents the soliciting of clients or employees by former employers. There is usually and time and geographical limitation set on this.
On the other hand, a non-compete agreement prohibits a former employee from working at or starting their own business as a direct competitor with former employers. These agreements also have time and geographical limitations set.
Types Of Non-Solicitation Clauses
Non-solicitation of customers and non-solicitation of employees; are two types of non-solicitation clauses and depending upon the companies and the arrangement, either one or both could be required.
Non-Solicitation Of Customers
For businesses where employees work closely with clients, a non-solicitation of customer agreement is used to ensure that employees are not able to take away the clients on their own or with them.
Non-Solicitation Of Employees
Companies at times put in a lot to train, prepare and shape employees to become their perfect selves. However, when an employee moves on there is a risk of them poaching away other employees too. A non-solicitation of employees’ agreement ensures that employees who are leaving cannot solicit other employees of a company or take them along.
Direct Vs Indirect Solicitation
Direct solicitation is when the client or employee is directly targeted by a former employee. For instance, if the former employee makes a call to invite an ex-colleague or client to work with the new company they are associated with, this is a direct solicitation.
Indirect solicitation is slightly more tricky. This could be when a former employee pushes someone else from the new business to make contact with previous old clients or other employees. It is often difficult to point out indirect solicitation if there is no breach of contract. However, if proven it will be treated as a violation of the agreement.
A non-solicitation agreement or a non-solicitation clause is signed between an employee and an employer. It restricts an employee from recruiting or contacting customers or other employees of a company after they have quit or left it. The agreement is usually applicable for a certain period of time and geographical area only.