Right up front the contract will say that "the Company employs" and that "the Employee agrees to be employed" from X until Y.
Does that mean you can't possibly leave?
No. As court decisions on these matters often point out, "slavery" ended generations ago. No matter what the paper says, you can't be chained to your desk. The contract gives you various compensation guarantees and some measure of security. But it can't force you to work for the employer.
About the best the contract can do for the employer is to try to discourage you from working for any of his competitors. However, that can hurt you. After all, they're more likely than anyone else to want you, and to pay big money to get you. If you're performing brilliantly for your employer, you're able to do the same thing just as well for them.
Two clauses., "noncompete" and "confidentiality"...will try to keep you away from your most likely alternative employers. Fortunately, both clauses are hard to enforce by suing you for breach of contract, because the employer must prove damages in order to get money from you. And most of the time that's not easy. If you leave and take major customers or clients with you, she probably can prove she's lost profits. But if you merely withdraw your management brilliance and the operation doesn't fall apart the minute you walk out, she's got a very weak case.
The "noncompete" clause pledging you not to join a competitor during the term of the contract...and possibly for several years afterward...is particularly interesting because there's a logical "Catch 22," which you can use in bargaining with your employer. If you're so valuable that he has to isolate you from all his competitors, then he should be paying you plenty for your work ...and for your vow of competitive celibacy. Conversely, if your agreement to stay away from your likeliest future employers isn't costing your employer very much, then it shouldn't be very stringent.
Hard as it may be for your employer to recover damages if you join a competitor when prohibited by your contract, the noncompete clause still has some nasty implications. The employer can sue you. And legal costs and time-consuming aggravation will cause you real pain. To your corporate employer they're not burdensome. Moreover, your appeal to other employers may fade if they know you're being sued by your former employer. Indeed, they may even be sued...rightly or wrongly doesn't matter...for "inducing" you to breach your contract.
Even though your employer may not be able to win a cent of damages from you in the long run, he can certainly give you trouble when you try to walk out. And in the end he may make you buy your freedom. He may offer to give up his "rights" under the contract if, in return, you give up some of your deferred compensation, a retirement benefit, or your latest earned-but- not-yet-paid bonus.
On the other hand, if you're a really hot property, you may be able to get protection from the company that's trying to hire you. They may be willing to provide the legal defense necessitated by breaking your contract, and to pay any judgment (unlikely) that's entered against you. Now your former employer has to pick on someone his own size. Chances are, he'll drop his sure-to-fail law suit.
So the bottom line is that you can walk out. But you may not be whistling.
In writing the noncompete clause, the employer will try to make the prohibition as broad and long-term as possible...perhaps shielding you from "any company or organization having any activities or interests competitive to the Employer, during this contract, and for X years afterward." You, of course, will want to minimize the prohibition. Try to:
1. Eliminate the clause. Say you aren't being paid enough to curtail your most likely employment opportunities.
2. Void the clause if you're fired, or if your contract isn't renewed.
Why should your employer be able to tell you what to do after she stops paying you? Moreover, if discarding you is correct and fair, you'll handicap her competitor. She should cheer you on!
3. Limit the clause to full-time work for a competitor. Try to preserve your chance to do consulting in your industry after retirement or firing.
4. Narrow the coverage to business units that are directly competitive. When only one subsidiary of a conglomerate competes with your employer, the rest of it shouldn't be off-limits. Try to get her to name the two or three competitors she's most concerned about, leaving you a chance to make a future living with the rest of the industry.
The "confidentiality" clause pledging you not to reveal your employer's trade secrets is the Siamese twin of your promise not to work for competitors.
Every business has some information it doesn't want outsiders to know... product formulae or diagrams; R&D, manufacturing, marketing, advertising, and e-commerce plans, methods, and breakthroughs; customer identities and buying patterns; incentive compensation schemes; acquisition and divestiture strategy and plans. The list could go further.
The need for confidentiality is legitimate. Unfortunately, the wording of the clause probably won't be. It may prohibit you from revealing anything at all about the company while you work there and perhaps long afterward. Indeed, the clause may be so broad that you virtually can't help but run afoul of it. Then whenever the company wants to get rid of you, breach of confidentiality will come in handy as one among several trumped-up reasons.
The employer's strategy is strictly legal harassment. Damages could never be proven for divulging unimportant information that was probably already widely known. But the lawyers could try to claim a "cause" for your firing, as they chip away at your protection under the contract.
Your strategy, on the other hand, is to whittle down the outrageously broad language. Try to eliminate the clause. And, failing that, try to have it cover only:
1. intentional (not accidental) disclosures that
2. could be harmful to the company.
In the long run you needn't fear this clause much. But you know why the employer wants it worded to take in the whole blue sky. So do your best to get it worded sensibly.
