Agreement not to solicit employees: Overview, definition, and example
What is an agreement not to solicit employees?
An agreement not to solicit employees is a legal contract or clause within a broader agreement where one party agrees not to directly or indirectly encourage or attempt to hire employees from another business or organization. This type of agreement is often included in employment contracts, partnership agreements, or business sales agreements to prevent employees from being poached by competitors or former partners for a certain period of time after the agreement is made.
In simpler terms, an agreement not to solicit employees means that one party agrees not to try and hire workers from another business, helping to protect that business’s talent pool.
Why is an agreement not to solicit employees important?
An agreement not to solicit employees is important because it helps protect businesses from losing valuable employees to competitors or other businesses involved in a transaction. It ensures that parties involved in a business agreement—whether as partners, vendors, or employees—do not take advantage of their relationship to entice employees to leave for better opportunities elsewhere. For businesses, it helps maintain stability, protect intellectual property, and avoid disruption in operations.
For SMB owners, using such agreements can help safeguard their workforce and prevent competitors from benefiting from the business's investments in training and development.
Understanding an agreement not to solicit employees through an example
Let’s say your company is negotiating a partnership with a software provider. As part of the agreement, both parties sign an agreement not to solicit each other’s employees for a period of two years. This means that the software provider cannot actively recruit or hire your developers or key staff members during that time, and vice versa. If either party violates this agreement, they could face legal consequences or penalties, such as damages for lost business or employee training costs.
In this case, the agreement not to solicit employees ensures that both businesses can work together without fearing the loss of talent due to the partnership.
Example of an agreement not to solicit employees clause
Here’s an example of what an agreement not to solicit employees clause might look like in a business contract:
“For a period of two (2) years from the effective date of this Agreement, neither Party shall directly or indirectly solicit, recruit, or hire any employees of the other Party without prior written consent. This provision shall apply to employees who were employed by the other Party at any time during the term of this Agreement.”
Conclusion
An agreement not to solicit employees helps protect a business’s workforce and prevent employees from being recruited by competitors or other entities involved in a business relationship. For SMB owners, including such clauses in contracts can help secure the stability and continuity of their teams, protecting valuable human capital and ensuring that partnerships or agreements don’t lead to the loss of key employees. By defining and enforcing these terms, businesses can reduce the risk of employee poaching and safeguard their interests.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.