---

name: draft-non-compete
description: Use when drafting a non-compete clause or standalone non-compete agreement for an employment, partnership, or M&A context. Covers enforceability rules by jurisdiction (LB, KSA, UAE federal, DIFC, FR, US California), required elements (duration, geography, activity scope, consideration), a model clause, carve-outs, and the critical pairing with non-solicit provisions. Triggers on "non compete", "non-competition", "restraint of trade", "post-employment restriction", or "competition clause" requests.
license: MIT
metadata:
id: draft.non-compete
category: draft
practice_area: employment
jurisdictions: [UAE, DIFC, ADGM, KSA, LB, FR, UK, US]
priority: P1
intent: [non compete, non-competition, restraint of trade, post-employment restriction, competition clause]
related: [draft-non-solicit, draft-employment-contract, draft-nda-unilateral, review-employment-risk]
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Non-Compete Clause / Agreement

When to use this

Use this skill when drafting a post-employment or post-relationship non-competition obligation. Three primary contexts:

1. Employment: restricting a departing employee from working for a competitor or starting a competing business for a defined period and geography
2. Business / share sale (M&A): restricting the seller of a business from competing with the buyer's newly acquired business (these are generally more enforceable than employment non-competes because the seller has received consideration specifically for the goodwill)
3. Partnership / JV dissolution: restricting a departing partner or JV party from competing with the remaining business

Always pair with [[draft-non-solicit]] — non-solicitation clauses protect customer and employee relationships, are easier to enforce, and provide protection even when the non-compete fails.

Required inputs

Input	Why it matters	Default
Restrained party	Employee / departing shareholder / partner	— must supply
Restraining party	Employer / buyer / remaining business	— must supply
Duration	How long after departure	12 months (employment); 24-36 months (M&A or partnership)
Geographic scope	Country, region, named cities	The jurisdiction(s) where the business actively competes
Activity scope	Specific industry, specific competitors, customer-facing roles only	The narrower the better for enforceability
Consideration	What the restrained party receives for agreeing	Signing bonus, severance, continued employment, purchase price
Governing law	Determines enforceability	Jurisdiction of employment / transaction

Enforceability — jurisdiction matrix

Enforceability of non-competes varies dramatically by jurisdiction. Always verify current law with local counsel before finalizing.

Jurisdiction	Enforceability	Key rules
Lebanon (LB)	Enforceable in principle	Civil-law courts narrowly construe; must protect a legitimate business interest; limited in scope, geography, and duration; consideration recommended but not strictly required; court may reduce but typically will not rewrite
KSA	Enforceable up to 2 years	Saudi Labor Law Art. 83: enforceable if it protects a legitimate interest, is limited in scope and duration, and is proportionate; courts may judicially narrow excessive provisions
UAE federal	Enforceable up to 2 years	Federal Decree-Law 33/2021 (Labor Law) Art. 10 + Cabinet Decision 1/2022: enforceable for specialized roles where employee has access to confidential info or customer relationships; must be proportionate; may require court order for enforcement; 2-year cap on duration
DIFC	Enforceable per DIFC Employment Law Art. 13	Common-law reasonableness test; protection of legitimate business interest; limited scope, geography, duration; Blue-pencil doctrine applied — courts may sever unreasonable provisions without voiding the whole clause
ADGM	Enforceable — reasonableness test	Similar to DIFC; based on common-law principles
France	Strictly regulated	Four mandatory elements: (1) written form; (2) limited in time; (3) limited in geography; (4) limited in activity; AND (5) mandatory financial compensation paid to employee during the restraint period (typically 25-33% of last monthly salary per month of restraint) — without compensation, the clause is void
UK	Enforceable if reasonable	Common law garden leave / non-compete; reasonableness test; PILON clauses interact; consideration at time of contract
California (US)	Essentially unenforceable	Business and Professions Code § 16600 voids employment non-competes with very narrow exceptions (sale of business); note: California courts apply this to California employees regardless of choice-of-law clause pointing to another state

Model clause (employment context)

"During the Term of Employment and for a period of [12/24] months following the termination of the Employee's employment for any reason (the Restricted Period), the Employee shall not, directly or indirectly, within the [Restricted Territory] (meaning [defined geography]):

(a) own, manage, operate, control, be employed by, provide services to, participate in, or be connected with, in any capacity, any Competing Business (as defined below);

(b) hold any equity interest in any Competing Business exceeding [2%] of the issued share capital of a publicly listed company;

(c) serve as a director, officer, consultant, advisor, or independent contractor for any Competing Business.

For the purposes of this clause, 'Competing Business' means any business that competes directly with [Employer's Business as defined in Schedule X]."

Adjust bracketed items per the inputs. The more specifically the Competing Business is defined, the more enforceable the clause — "any business that competes in any way" is far weaker than naming specific types of companies or named competitors.

Critical elements

Legitimate business interest

A non-compete that protects no genuine interest will be struck down in most jurisdictions. Recognized legitimate interests include:

• Trade secrets and confidential customer/technical information
• Customer relationships (the employee had material contact with and relationship with customers)
• Business goodwill acquired by the employee at the employer's expense
• Specialized skills or training provided by the employer

A non-compete that simply prevents an employee from using their general skills and experience in the market is not protecting a legitimate interest — it is suppressing labor mobility, which courts do not accept.

Proportionality

Even where there is a legitimate interest, the restraint must be proportionate:

• Duration: 12 months is standard and generally enforceable; 24 months is the outer limit in most jurisdictions (especially UAE Art. 10); anything beyond 24 months for employees is very high risk
• Geography: must match the actual area in which the business operates and where the employee competed — a Saudi-based employee with a global non-compete is unlikely to be enforced globally
• Activity scope: "any employment in the technology sector" is too broad; "any role in B2B fintech product development focused on MENA remittances" is more precise and more enforceable

Consideration

• In employment contexts: consideration is the employment itself if the clause is signed at the start; for clauses added during employment, additional consideration (bonus, promotion, salary increase) must be provided for the new restriction
• In France: mandatory financial compensation during the restraint period is a statutory requirement, not optional
• In M&A: the purchase price for the business is the consideration

Carve-outs

Standard carve-outs that improve commercial acceptability without destroying protection:

• Holding up to [2-5%] of shares in a publicly listed company (passive investment, no management role)
• Employment in the same broad industry but in a non-competing division (e.g., working for a bank that does not compete in the employer's specific product line)
• Return to home jurisdiction if the employee was relocated for the role (limits the geographic scope effectively)
• Activities that the employer is not currently conducting (protects existing business, not future aspirations)

Pairing with non-solicit

Non-compete and non-solicit clauses serve different but complementary functions:

• Non-compete: prevents the departing party from working for or building a competing business
• Non-solicit: prevents the departing party from taking customers or employees from the former employer

Courts universally consider non-solicit clauses more favorably than non-competes because they protect a more specific, definable business interest without broadly preventing the individual from earning a living.

Best practice: include both provisions. If the non-compete is struck down or narrowed, the non-solicit may survive and provide meaningful protection for the employer's customer relationships and talent.

See [[draft-non-solicit]] for the companion skill.

Common mistakes

• Drafting a global non-compete for an employee whose work was regionally limited — unenforceable in most jurisdictions
• No additional consideration for a mid-employment clause amendment — renders the new restriction unenforceable for lack of consideration (common-law jurisdictions)
• Copying a California non-compete form for use in UAE or France — fundamentally different enforceability frameworks
• Activity scope defined as the entire industry rather than the specific competitive activity — courts will strike it down
• Omitting France's mandatory compensation — the clause is void without it; the employer does not even get a morally binding commitment

Related skills

• [[draft-non-solicit]]
• [[draft-employment-contract]]
• [[draft-nda-unilateral]]
• [[review-employment-risk]]