The Importance of Non-Solicitation Agreements in Today’s Business Landscape

In today’s globalized economy, employment agreements like the comprehensive non-solicitation agreements have become increasingly important. Arab business owners can no longer only focus on the Middle East. Required by many Arab countries, business owners need to form relationships with international partners. The need for outside relationships and connections has only become more apparent as pandemic related lockdowns have altered business opportunities. The non-solicitation agreement for employees has emerged as a way to protect business in the Arab world while supporting the Arab world’s new international business relationships.

This contract stipulates that the employee cannot directly or indirectly solicit current customers, clients, or other employees. In layman terms, it means that employees cannot pursue company contacts after termination. Employment termination may be voluntary or involuntary. Solicitation for purposes of this agreement typically refers to contacting client contacts, employees, affiliates, or even independent contractors. The use of this contract usually requires agreement from both parties. Some non-solicitation agreements will prevent solicitation for a specific period of time, often one or two years, after termination of employment.

Theoretically, the non-solicitation agreement for employees is important to the global market if only to protect existing business relationships. In the instance of an Arab business owner selling their company, the buyer will want guarantees about existing business relationships. This means that the seller’s staff, clients and contractors will want similar assurances. It is possible for a non-solicitation agreement for employees to include assurances from the buyer about the future treatment of employees. In this instance, the non-solicitation agreement for employees will provide a path to a seamless transition.

Business owners might also use a non-solicitation agreement for employees to protect the value of a startup. Startups are often comprised of innovative employees who intend to go independent at some point. A covenants not to compete is likely an unreasonable request. Instead, these creative startup entrepreneurs will be very open to the idea of protecting the company’s interests through a non-solicitation agreement for employees.

For existing businesses, the non-solicitation agreement for employees allows the business owner to make the alliances previously mentioned. While employees cannot be guaranteed future employment with a new owner, they can be offered assurances about how they will be treated. A savvy purchaser will insist on these same assurances in order to protect the company they are purchasing.

Corporate ethics ARE business ethics. This is true whether the business will be sold or not. In the Arab business world, buying or merging with other regional businesses may be the best way forward. This means Arab business owners need to choose their partners carefully. The non-solicitation agreement for employees may be useful here. When pursuing international business owners, having a non-solicitation agreement for employees ensures purchasing power. Diplomacy may be required, but trust does not need to factor into the equation.

Scenario one: A local, privately owned bakery chain is purchased by a large, internationally owned business. Most employees have signed a non-solicitation agreement for employees. Even so, the purchaser does not want the worry of potential legal issues. The buyer needs assurances about the staff. In this scenario signed agreements do not matter. The two owners can draft a letter to acknowledge the existing non-solicitation agreement for employees. This will take the guess work out of potential legal action.

Scenario two: A small Arab owned business is listed for sale. Several employees approach the owner about financing the transaction. This group of employees has worked for the company for several years and understand the business’ strong points. The seller offers to sell shares to employees. In this scenario, the non-solicitation agreement for employees protects the company’s value.

The Arab world is not the only region undergoing unprecedented changes. The European, Asian and US markets are all witnessing seismic shifts. Some markets might not be receptive to certain business practices. Due to the turbulent economy, fewer businesses are interested in challenging the existing social contract in their respective locations. This means staying in the center lane is a wise approach.

Global business travel was down in 2022 and is unlikely to be robust in 2023. The implications for the Globe are going to continue even after international travel returns. Businesses like factories are likely to remain down due to increased regulations and supply chain issues. Work from home is likely to remain a protocol for many office jobs.

Realistically, actual employees may not leave a company at all after firing or resignation. Many businesses are struggling to find quality employees. Even where employees change jobs, they may simply be moving from one location to another. In any case, the non-solicitation agreement for employees in even a narrow geographic area may be wise.

If you want employees to sign a non-solicitation agreement for employees, you need to ensure mutual benefit and kept promises. Business owners impose fees for overstepping contract terms. Yet it is often in the interest of business owners to offer security to workers who have been loyal. At the same time, employees should expect that fairness is the rule. An employer unwilling to keep promises made through a non-solicitation contract will quickly lose quality employees when the company is in turmoil.

Mutual consent is the bedrock of an employment contract. Without the ability to negotiate terms and conditions, the contract will be invalid. The best way to implement this agreement is to suggest it prior to finalizing an employee’s term of service. Once they are part of the team, the agreement is likely to seem one-sided. Reasonable limits, time periods and geographic locations should be stated clearly in the contract. Keep in mind that the goal is not to destroy the company’s reputation, negate social media relationships or otherwise dissuade good prospects. Even so, the agreement should list consequences for overstepping the agreement.

Many companies will not choose to implement a non-solicitation agreement for employees. Others will simply hire a lawyer to write contract language. This is not enough. Small attention to detail is essential. Imagine how far an employee will go to prove themselves correct, or to validate their personal assumptions. Even a small error could create huge problems. Consultative drafting that involves potential implications is the best way to avoid any issues. A good lawyer will willfully create the pro forma agreement, and in doing, they will establish best practices.

In the past, most companies did not utilize the non-solicitation agreement for employees. But as the market continues to shift, many professionals will seek legal options. A non-solicitation agreement for employees may become a common approach for many contract professionals.