When two or more parties enter into a contract, they start working with each other and invariably get access to each other’s employees, agents, vendors, etc. (let’s call them resources for ease of reference). It is quite normal that if you locate a good resource elsewhere, you feel like bringing it into your fold. Therefore, sometimes, parties end up inviting another party’s resources by offering better terms, incentivising them to jump over and what not.
This is a big problem for the party whose resources are so ‘hijacked’ by the other party. To prevent such events, one needs to incorporate adequate safeguards in the contract itself.
Let’s take the case of employees for the time being.
Non-solicitation is a provision that restricts a party from soliciting for employment or hiring employees of the other party. The core intent of this provision is to make certain that a party will not snatch away the employees of other party.
Key aspects of a non-solicitation provision are as follows:
a) Non-solicitation and no hiring: Non-solicitation covers two elements, one restriction is on soliciting and another restriction is on hiring of employees of the other party. Under non-solicitation restriction, a party will be prevented only from soliciting for employment the employees of the other party. On other hand, no-hiring restriction will prevent a party from hiring the employees of the other party
b) Tenure of non-solicitation provision: Tenure of non-solicitation will be agreed upon by the parties on case by case. However, it may be break down into following patterns:
1) Non-solicitation period can be less than actual term of the Agreement (say Agreement term is two years and non-solicitation term can be one year only)
2) Non-solicitation term can be same as the term of the Agreement (This means non-solicitation tenure will complete upon the termination or expiration of the Agreement)
3) Non-solicitation term can go beyond the term of the Agreement (Say Agreement term is two years and non-solicitation can be three years.
iv) No time-line restriction (means perpetual non-solicitation restriction, which will be rarely accepted by the parties)
c) Employees Class: Another interesting aspect is that non-solicitation can be drafted in different patterns with respect to classification of employees subjected to this obligation. Some categories as follows:
1) Senior management employees
2) Management or key managerial employees
3) All employees
4) Employees, consultants, contractors etc
d) Like every rule will have exception, non-solicitation does have some exceptions, solicitation or hiring of employees in the following cases will not cover under non-solicitation restriction:
1) Recruitment via (1) use of general solicitations, employment advertisements or (2) use of recruitment, employment or similar agencies
2) Recruitment of employees of other party (1) who approached a party without any solicitation or encouragement by such party, or (2) whose employment is terminated by the other party or who is no longer in employment of the other party
In some cases, parties may agree to submission of evidence to claim any of the foregoing exceptions. Further, parties may also extend application of non-solicit to former employees subject to timeline of 3 months, 6 months etc. which means a party cannot solicit or employee former employees of other party for a period of 3 months, 6 months etc., from the date of cessation of employment of such employee with the other party.
