The Non-Compete Letter is a crucial document in Malaysian business practice, typically issued when hiring senior executives, technical specialists, or employees with access to sensitive business information. It serves to protect an organization's legitimate business interests, trade secrets, and competitive advantage in the Malaysian market. The document must comply with Malaysian employment and contract law, particularly Section 28 of the Contracts Act 1950, which generally considers restraint of trade agreements void unless they are reasonable and protect legitimate business interests. The letter should clearly outline the scope of restrictions, duration, geographical limitations, and any consideration provided in exchange for the non-compete commitment.
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1. Letter Header: Company letterhead, date, and addressee details
2. Subject Line: Clear identification of the document as a Non-Compete Letter
3. Introduction: Reference to employment relationship or business context necessitating the non-compete obligation
4. Definition of Confidential Information: Clear specification of what constitutes confidential information and trade secrets
5. Non-Compete Obligations: Detailed description of prohibited competitive activities, including specific industry sectors and roles
6. Geographic Scope: Clear definition of the geographical area where the non-compete obligations apply
7. Duration: Specific timeframe for which the non-compete obligations will remain in effect
8. Acknowledgment: Statement acknowledging understanding and voluntary acceptance of the restrictions
9. Consideration: Clear statement of what the individual receives in exchange for the non-compete commitment
10. Signature Block: Space for signatures of both parties and dates
1. Garden Leave Provisions: Include when the agreement involves senior executives or key employees, specifying any paid non-work period
2. Non-Solicitation Clause: Add when there's a need to prevent solicitation of customers, employees, or suppliers
3. Remedies for Breach: Include when specific remedies or liquidated damages need to be outlined
4. Survival Clause: Add when certain obligations need to survive the termination of employment
5. Choice of Law: Include when there are potential cross-border implications
6. Severability Clause: Add when there's a need to ensure partial enforceability if some provisions are found invalid
1. Schedule A - Restricted Business Activities: Detailed list of specific business activities, competitors, or industry sectors covered by the non-compete
2. Schedule B - Geographic Restrictions: Maps or detailed description of restricted geographical areas
3. Schedule C - Consideration Details: If applicable, detailed breakdown of any financial compensation or benefits provided in exchange for the non-compete commitment
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