A non-compete agreement restricts where an employee can work after leaving your company. In domestic hiring, these clauses offer at least some protection. In international hiring, they’re frequently unenforceable — and including one without understanding local rules can cost you money rather than save it.
France enforces non-competes only if the employer pays financial compensation during the restriction period — typically 30–50% of salary for up to two years. Fail to pay, and the clause is void. The employee can also waive the non-compete at resignation unless the contract specifies otherwise. Germany imposes similar requirements: mandatory compensation of at least 50% of the last monthly salary for each month of restriction, with a maximum duration of two years. If you include a non-compete in a German employment contract without the compensation clause, it’s unenforceable — but you might still owe the employee the compensation amount by default.
California bans non-competes for employees outright. India doesn’t enforce post-employment non-competes under Section 27 of the Indian Contract Act — they’re considered restraint of trade and void. The Netherlands allows non-competes in permanent contracts but has sharply limited their use in fixed-term contracts since 2015, requiring employers to justify the clause with a compelling business interest. Italy enforces them if they’re written, compensated, limited in scope and geography, and no longer than 5 years (3 years for non-management). The European Commission’s work on non-compete clauses reflects a broader trend toward restricting their use across the EU.
The UK enforces “reasonable” non-competes, but courts routinely strike down clauses that are too broad. A clause restricting an employee from working in the same industry globally for 24 months will not survive challenge. Courts expect narrow geographic scope, limited duration (6–12 months is typical), and specific competitive activity definitions.
Why It Matters for EOR
When using an EOR, non-compete clauses should be drafted by the EOR’s legal team based on local enforceability standards. Don’t paste your US non-compete template into an international local employment contract. It won’t hold up, and in countries like Germany, the improperly drafted clause could trigger a compensation obligation you didn’t anticipate.
A better approach for most companies: focus on non-solicitation clauses and confidentiality agreements. Non-solicitation clauses — preventing a departing employee from poaching clients or colleagues — are more broadly enforceable across jurisdictions. Confidentiality agreements protecting trade secrets and proprietary information are enforceable in virtually every country. These two instruments, properly drafted per local law, give you stronger practical protection than a non-compete that a court might void entirely.
Ask your EOR what’s actually enforceable in each country before including restrictive covenants. Providers like Deel and Remote should advise on the local landscape rather than including boilerplate language that looks protective on paper but carries no legal weight. If IP protection is critical to your business — you’re hiring engineers, for example — prioritize robust IP assignment clauses and invention assignment agreements over non-competes.
For practical use of this concept, see EOR vs PEO explained and remote jobs by country.
Further Reading
- Hiring in the United States: non-compete enforceability by state — US non-compete law varies dramatically by state, from fully enforceable in Florida to banned outright in California.
- Hiring in Germany: mandatory compensation for non-compete clauses — German law requires employers to pay at least 50% of salary during any non-compete restriction period.
- Contractor vs. employee: how classification changes IP protection options — Non-competes apply differently to contractors and employees, and misclassification can void protective clauses entirely.
- EOR comparisons
- Read Deel review
- EOR vs PEO explained
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