Non-solicitation of employees: Overview, definition, and example
What is non-solicitation of employees?
Non-solicitation of employees refers to a contractual provision that prevents one party from recruiting, hiring, or attempting to hire the employees of another party for a specified period of time after the termination of a business relationship or agreement. This clause is commonly included in employment contracts, business sales, and partnership agreements to protect a company’s workforce and prevent the unfair poaching of key employees. The goal is to safeguard the company’s investment in its employees and prevent competition from benefiting from that investment.
Why is non-solicitation of employees important?
Non-solicitation clauses are important because they protect businesses from losing critical employees to competitors or former business partners, particularly after an acquisition, merger, or the end of a professional relationship. These clauses help maintain stability in a company’s workforce, especially when an employee possesses specialized knowledge or skills that are valuable to the business. By preventing solicitation, businesses can avoid the disruption that may occur if key staff members leave to join a competitor or start a competing business with knowledge of sensitive company operations.
Understanding non-solicitation of employees through an example
Imagine a company that sells its business to another company. As part of the sale agreement, the selling company includes a non-solicitation clause to prevent the buyer from poaching its employees shortly after the acquisition. This ensures that the selling company’s employees are not recruited by the buyer to join the new organization, which could undermine the value of the sale and cause instability in the workforce.
In another example, a software development firm hires a consultant to work on a major project. The firm includes a non-solicitation clause in the contract, preventing the consultant from recruiting any of the firm's employees to join a competing firm for a period of two years after the contract ends. This protects the firm’s talent pool and prevents the consultant from leveraging the relationships made during the project to take employees to a competitor.
An example of a non-solicitation of employees clause
Here’s how a non-solicitation of employees clause might look in a contract:
“The Employee agrees that for a period of 12 months following the termination of their employment with the Company, they will not, directly or indirectly, solicit or attempt to hire any employee of the Company for employment with another business or entity.”
Conclusion
Non-solicitation of employees clauses are essential tools for protecting a company’s workforce and ensuring that the value of human capital is not undermined by external parties attempting to poach employees. These provisions help maintain business stability, reduce the risk of talent loss to competitors, and ensure that employees remain with their current employer for an agreed-upon period. Including clear non-solicitation terms in contracts helps establish mutual expectations and safeguard both business interests and employee retention.
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.