What non-compete means
A non-compete stops somebody competing with you after the relationship ends.
It is a restraint of trade, and that is the legal starting point. The general position is that restraints on a person's ability to earn a living are void unless they can be justified as reasonable, both between the parties and in the public interest.
So the question is never simply whether the clause exists. It is whether it is reasonable in scope, in geography and in duration.
How it is used
Employers use them for senior staff with genuine access to trade secrets or customer relationships. Businesses use them when selling a company, so the seller does not immediately open a competing operation next door.
A well drafted clause identifies the interest being protected, restricts only what is necessary to protect it, and limits the restriction in time and area. A clause that stops a former employee working anywhere in Nigeria in any capacity for three years protects nothing a court will recognise, because it protects far more than any legitimate interest requires.
Key features
- Restricts competing activity after the relationship ends
- Must protect a legitimate interest such as trade secrets or customer connection
- Must be reasonable in duration, geography and scope of activity
- Far more readily enforced on a seller of a business than on an employee
- Often paired with non-solicitation and confidentiality clauses
How this works in Nigeria
Nigerian courts follow the restraint of trade doctrine, and the National Industrial Court has been notably protective of employees' right to earn a living.
That makes broad employment non-competes fragile. Employers are on far stronger ground with confidentiality obligations and non-solicitation clauses, which protect the actual interest without preventing somebody working in their profession.
In a business sale the analysis is different. A buyer paying for goodwill has an obvious legitimate interest in the seller not immediately competing, and courts are much more sympathetic.
Non-compete vs non-solicitation vs confidentiality
A non-compete stops somebody working in a competing business. It is the broadest restriction and the hardest to enforce.
A non-solicitation stops them approaching your customers, or poaching your staff, for a period. It is narrower, targets the real harm, and is much more likely to be upheld.
A confidentiality obligation stops them using your information. It is the narrowest of the three, the easiest to justify, and it survives long after employment ends.
Employers who reach straight for the non-compete often end up with nothing. Employers who use all three, drafted proportionately, usually keep the protection that matters.
Limits and risks
A clause that is unreasonable is not narrowed by the court as a favour to the employer. In many cases it simply fails, leaving no protection at all.
Enforcement also requires speed and money. By the time a case is heard, the employee may have been with the competitor for months, which is why injunctive relief and prompt action matter more than the drafting alone.
Worth knowing
Overreaching is self defeating. A narrow, reasonable clause that a court will enforce is worth far more than a sweeping one that fails entirely.
Questions people ask
Are non-compete clauses enforceable in Nigeria?
Only where they are reasonable. Restraints of trade are void unless justified by a legitimate interest and limited appropriately in time, geography and scope. The National Industrial Court is protective of an employee's right to earn a living.
How long can a non-compete last?
There is no fixed maximum, but shorter is far more defensible. Six to twelve months is a common range for employees. Longer periods need real justification, and are much more likely to be upheld in a business sale than in employment.
What is the difference between a non-compete and a non-solicitation?
A non-compete stops somebody working for a competitor. A non-solicitation stops them approaching your customers or staff. The second is narrower, targets the actual harm, and is far more likely to be enforced.
Can my employer stop me joining a competitor?
Only if the clause is reasonable and protects a legitimate interest such as trade secrets or customer connection. A blanket restriction on working anywhere in your industry is unlikely to survive scrutiny.
Are non-competes stronger when selling a business?
Yes, considerably. A buyer paying for goodwill has an obvious interest in the seller not immediately competing, and courts treat that very differently from a restriction imposed on an employee.
Documents that use this
Read more on this
Elements of a Non-Compete Agreement
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