Non-Compete Clauses for Freelance (Part 1)

Working as a freelancer has its perks but if you sign a non-compete clause you may be restricted in regards to the work you can do.

What are they?

A non-compete clause is a restrictive covenants which seek to restrict the trade, professional or location of any new company or job you take when you leave your current role. They seek to protect the employer or contractor from any undue pressure which may be caused from your establishment in a similar location.

You've signed a non-compete clause

Your hard work has paid off, you have landed that elusive contract with an industry giant, “ABC Ltd”, and they handed you their standard contract terms which you duly signed. You gave it a read, but only hastily, whilst texting your friends to let them know the champagne was on you!

You didn’t notice that pesky non-compete clause tucked away under the title “Restrictive Covenants” which clearly stated you can't work for another industry competitor for a period of 2 years from signing. But surely that doesn’t matter - you've landed a massive career boost. Now fast-forward 6 months, and you've decided that freelance life isn’t for you after all. You want someone else to deal with the tax man for a change, and besides, you’ve landed a dream role with another industry giant “B Co Ltd”.

Well, I'm sorry to be the bearer of bad news, but that dream job - with the amazing salary and benefits - is going to have to be turned down. Why? Because you signed a non-compete clause with ABC Ltd, so sadly it's bye-bye dream job.

Read the small print!

Whilst this is just a hypothetical situation, it's a common scenario. We're all guilty of skim-reading the small print, but a non-compete clause can trap you in a situation that causes you to miss out on that dream opportunity. It's vital to read any contract carefully and ensure you understand exactly what the terms, conditions and restrictions are.

These clauses are common place and easily recognizable, some nice drafters even pop them under a heading of 'Non-Compete'. Whilst they're a small part of a contract, possibly only forming a few lines of a 10-page document, they could have a big impact on you in terms of working for other companies.

These clauses can't be everlasting or unreasonable, and therefore shouldn’t seek to restrict you unnecessarily or in a manner which is frankly overkill. Whilst it may be considered reasonable to stop you working for B Co Ltd during a 2-year period of working with ABC Ltd, the latter couldn’t seek to stop you working for another industry competitor indefinitely.

Negotiate or get advice

If you've read the contract and have any questions you are entitled to go back and ask about the terms. You're more than within your rights to negotiate the terms, ask to alter the period or area that you are stopped from working in, but it's key to note that not all companies will negotiate, so be prepared for this. Alternatively, you can seek legal advice, there are various free legal advice forums but the Law Society will have an up to date, and current list of solicitors in your area.