7 Post-Employment Prohibitions
Other than the non-compete clause, there are seven other post-employment prohibitions that can be agreed upon by the employee and the employer in the employment contract.
[1] Forfeiture-for-Competition Clause[2] Compensation-for-Competition Clause[3] Garden-Leave Clause[4] Confidentiality and Non-Disclosure Clause[5] Non-Solicitation Clause[6] Non-Recruitment and Anti-Piracy Clause[7] Inventions Assignment Clause (Intellectual Property Clause)
[1] Forfeiture-for-Competition ClauseThe “Forfeiture-for-Competition Clause” is a stipulation in an employment contract wherein an employee forfeits certain benefits like stock option or incentive bonus or deferred compensation to which an employee would have been entitled because of his act of engaging in competitive employment or activities after termination of his employment.
[2] Compensation-for-Competition Clause
“Compensation-for-Competition Clause” is a provision in an employment contract which requires the payment by the employee of some amount of money to his former employer in order to engage in competitive employment or activities after termination of his employment. This is also known as a "clawback" provision.
These two kinds of clauses may be combined for greater protection of the employer’s interests.
[3] Garden-Leave Clause
A “Garden-Leave Clause” is a variant of the non-compete agreement. Under this provision, an employee who has left his work either by reason of termination or resignation is bound to stay at home or in his “garden” during the garden-leave period at which time, he continues to receive all his salaries and benefits but is prohibited from commencing employment with new employers until this period has elapsed. He thus remains subject to all the strictures of his former employer as if he is still under employment with the latter.
The term “garden leave” is based on the old-fashioned and attractive idea that the employee will be paid his salaries and benefits while he tends to his “garden” at home.
[4] Confidentiality and Non-Disclosure Clause
The confidentiality and non-disclosure clause reflects the commitment of the employee that he shall not, either during the period of his employment with the employer or at any time thereafter, use or disclose to any person, firm or corporation any information concerning the business or affairs of his employment, for his own benefit or to the detriment of the employer. This clause may also cover Former Employer Information and Third Party Information.
[5] Non-Solicitation Clause
To protect the legitimate business interests of the employer, including its business relationships, the employee under this clause, may, directly or indirectly, be prohibited from soliciting or approaching, or accept any business from any person or entity who shall, at any time within a fixed period preceding the termination of his employment, have been:
(a) a client, talent, producer, designer, programmer, distributor, merchandiser, or advertiser of the Company;
(b) a party or prospective party to an agreement with the employer, or;
(c) a representative or agent of any client, talent, producer, designer, programmer, distributor, merchandiser, or advertiser of the employer for the purpose of offering to that person or entity goods or services which are of the same type as or similar to any goods or services supplied by the employer at termination.
[4] Confidentiality and Non-Disclosure Clause
The confidentiality and non-disclosure clause reflects the commitment of the employee that he shall not, either during the period of his employment with the employer or at any time thereafter, use or disclose to any person, firm or corporation any information concerning the business or affairs of his employment, for his own benefit or to the detriment of the employer. This clause may also cover Former Employer Information and Third Party Information.
[5] Non-Solicitation Clause
To protect the legitimate business interests of the employer, including its business relationships, the employee under this clause, may, directly or indirectly, be prohibited from soliciting or approaching, or accept any business from any person or entity who shall, at any time within a fixed period preceding the termination of his employment, have been:
(a) a client, talent, producer, designer, programmer, distributor, merchandiser, or advertiser of the Company;
(b) a party or prospective party to an agreement with the employer, or;
(c) a representative or agent of any client, talent, producer, designer, programmer, distributor, merchandiser, or advertiser of the employer for the purpose of offering to that person or entity goods or services which are of the same type as or similar to any goods or services supplied by the employer at termination.
[6] Non-Recruitment and Anti-Piracy Clause
This clause prohibits the recruitment by the employee of personnel or employees of the employer for a certain period after his termination of employment, either on his own account or in conjunction with or on behalf of any other person.
[7] Inventions Assignment Clause (Intellectual Property Clause)
In industries engaged in research and development and related activities, this clause requires the employee, within a certain period, to disclose in confidence to the employer and its subsidiaries and to assign all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works and trade secrets, whether or not patentable, copyrightable or protectable as trade secrets (collectively, the “Inventions”), which the employee may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of his employment with the employer.
This clause prohibits the recruitment by the employee of personnel or employees of the employer for a certain period after his termination of employment, either on his own account or in conjunction with or on behalf of any other person.
[7] Inventions Assignment Clause (Intellectual Property Clause)
In industries engaged in research and development and related activities, this clause requires the employee, within a certain period, to disclose in confidence to the employer and its subsidiaries and to assign all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works and trade secrets, whether or not patentable, copyrightable or protectable as trade secrets (collectively, the “Inventions”), which the employee may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of his employment with the employer.