Although sometimes found in transactions between parties, non-solicitation and non-competition (or non-compete) clauses are typically found in employment agreements. The difference between both lies in the scope of what they prohibit.

 

A non-solicit restricts, restrains or prohibits the employee (or party if a transaction) from contacting the employer’s past, present (or sometimes prospective) customers, vendors or employees depending on who is specified  in the non-solicitation clause.

 

A non-compete on the other hand prohibits the employee from engaging in the same business or industry as the employer. The Prohibition is typically limited by time and geographical area which should be reasonable for such clause to be legally enforceable

 

As such whilst the non-compete is an absolute prohibition on the employee (or party) from engaging in a similar industry or business, the non solicitation clause allows the employee to engage in the same industry or business but the employee must not engage in such business with the employer’s customers or vendors.

 

Why do employees need to sign an Intellectual Property/Invention Assignment Agreement?