What is a non-compete agreement?

Non-competes are one kind of restrictive covenant. The others are non-solicitation clauses (no approaching clients or staff), non-dealing clauses and confidentiality terms. Because a non-compete stops someone earning a living in their field, courts in most countries look at them more strictly than at the narrower restrictions.

In the US, enforceability is set state by state. California’s Business and Professions Code section 16600 makes contracts restraining anyone from a lawful profession, trade or business void, and says it should be read broadly to void any employment non-compete that does not fit a statutory exception. A Federal Trade Commission rule that would have banned most non-competes nationally was set aside by a court, and in September 2025 the FTC voted to drop its appeals and accept that outcome; it now challenges non-competes case by case. In Canada, Ontario’s Employment Standards Act has prohibited employers from entering into non-competes with employees since 25 October 2021, with exceptions for the sale of a business and for executives.

In the UK, contracts can include restrictive covenants and an employer can take a former employee to court for breaching one; whether a particular covenant will be enforced depends on its exact wording, and GOV.UK points people to a solicitor or Acas for that judgement. In Australia, on 7 September 2026 the government released draft legislation to ban them for workers earning under the Fair Work Act high-income threshold of $190,100; as of October 2026 that ban is not yet law.

For most roles, a well-drafted confidentiality clause and a narrow non-solicitation clause protect what the business actually cares about with far less legal risk, and garden leave during a long notice period can keep a senior leaver away from clients for a time. This is general information, not legal advice.

Also called: non-compete clause, restrictive covenant, covenant not to compete.