A non-solicitation clause is a contract term in which one or both parties agree not to recruit the other’s employees, and sometimes not to solicit its customers, during the contract and for a period after it ends. In IT, MSP and consulting contracts, it usually protects the provider’s engineers and consultants from being hired away by the customer they work with, and often protects the customer’s staff in return. The clause is common, but its scope and enforceability vary a great deal by jurisdiction and wording.
At a glance
- It restricts actively recruiting the other party’s employees, and sometimes contractors or customers.
- It usually covers the contract term plus a tail period after it ends.
- General job ads and unsolicited applicants are often carved out.
- Some contracts include a conversion fee that allows hiring with payment.
- Enforceability varies by state and country and depends on the wording; no-hire terms carry extra antitrust risk, so check with counsel.
What problem it solves
Service providers invest in recruiting and training the people they place on customer accounts. A customer working closely with a skilled engineer for months is in a strong position to hire them, which can leave the provider short-staffed and losing its investment. Customers face a similar risk in the other direction when a consultant works alongside their team.
The clause gives both sides confidence to share people and knowledge during the engagement. For buyers, it also has a cost: it can stop you from hiring the person who knows your environment best, which matters most when you are bringing services back in-house or changing providers.
How it works
Who is covered. The clause may cover all employees, only those who worked on the account, or those the party had contact with. Some extend to contractors.
What is restricted. Most clauses restrict soliciting or inducing employees to leave. Some also restrict hiring, which turns them into a no-hire clause. An employee non-solicitation clause limits active recruiting; a company-to-company no-hire or no-poach term typically bars hiring the other party’s workers outright, and carries more legal risk (see Enforceability). A customer non-solicitation variant restricts one party from pursuing the other’s customers, which is more common in partner and reseller agreements than in buyer contracts.
Carve-outs. Common exceptions include general advertisements not targeted at the other party’s staff, people who approach on their own, and people who left the other party some time ago.
Duration. The restriction usually runs during the contract and for a period after it, which depends on the survival clause. Shorter periods and narrower scopes are generally viewed as more reasonable, but what is acceptable varies by jurisdiction.
Remedies and conversion fees. Some clauses set a fee payable if a party hires a covered employee, often described as a placement or conversion fee. Others rely on general breach remedies.
Enforceability. Whether a non-solicitation clause is enforceable, and to what extent, depends on the governing law, the jurisdiction where the employee works, the clause’s scope and the circumstances. Some US states and some countries limit restrictive covenants. No-hire and no-poach terms raise a separate issue: in the US, a naked no-poach agreement between competing employers, one not tied to any legitimate collaboration, can create serious civil and even criminal antitrust exposure. A restraint that is reasonably ancillary to a legitimate services relationship, such as one limited to staff on the account for a short period, needs a fact-specific analysis. Other countries apply their own competition and employment rules. This is general information; it isn’t legal advice, so involve antitrust and employment counsel before agreeing to a no-hire restriction.
Provider staff turnover and continuity are recurring issues in managed network services, where the clause most often comes up.
When it matters for buyers
- Bringing services in-house. Hiring the provider’s engineers can be the quickest way to keep knowledge, if the contract allows.
- Long consulting or staff augmentation deals. Embedded consultants are the usual target of these clauses.
- Changing providers. A new provider may want to hire the old provider’s account team; check whether the clause reaches it and plan alongside exit assistance.
- M&A. Combining companies can bring staff from vendors and customers together.
- Mutuality. Check whether your staff are protected too.
Questions to ask vendors
- Is the non-solicitation clause mutual?
- Which employees are covered: all staff, or only those who worked on our account?
- Does it restrict only solicitation, or also hiring someone who applies on their own?
- Are general job ads and unsolicited applicants excluded?
- How long does it last after the contract ends?
- Is there a conversion fee that would let us hire a team member, and how is it calculated?
How it differs from an exclusivity clause
An exclusivity clause restricts who a party may do business with, for example requiring the customer to buy a service only from one provider. A non-solicitation clause restricts recruiting the other party’s people (or sometimes customers) and says nothing about which suppliers you use. Both restrict future choices, and both can face legal limits in some jurisdictions, but they protect different things: exclusivity protects revenue, non-solicitation protects staff.