Tiny Software Company creates software security applications intended to protect

Question

Tiny Software Company creates software security applications intended to protect point-of-sale terminals in retail stores from being hacked. While Tiny Software hires talented and experienced employees, it provides a significant amount of training for those employees. There are two other companies that produce similar software and that compete with Tiny Software, and there are often rumors of other companies that are being formed to compete with Tiny Software. Should Tiny Software have its employees sign non-compete agreements? Can Tiny Software require that current employees sign non-compete agreements, or will Tiny Software only be able to require that new employees sign non-compete agreements? What should the terms of the non-compete agreements be so that they will be enforceable?

Explanation / Answer

Answer:

It is a very common practice in the business world that the organisation enter into Non Disclosure Agreements and in sensitive cases into Not-Compete Agreements with their business associates or the employees to whom they train. Generally these Non-Compete agreements are enteres at the time of recruitments itself and that is the most appropriate time for entering into such agreements. Entering a Non-Compete Agreement with the current and existing employees may not succeed where the employees object to such agreements.

In the given case Tiny Software may find it difficult to get the signatures of current employees on the Non-Compete Agreements as their terms of employment do not specify any such agreement. However, it can very well enter into such agreements with the new employees by manking such agreement as a part of terms of employment.

To make it enforceable, the terms of agreement shall not be;

1. For an indefinite period;

2. prejudicial or harsh on the part of employees;

3. shall not create any bar on the employees;

4. shall not defeat the competition sentiments of the industry.

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