Non-Compete Agreement Template (Nigeria) Template — 🇳🇬 Nigeria

Are non-compete agreements enforceable in Nigeria? The short answer is yes, but only if they are reasonable and protect a legitimate business interest. Under Nigerian law, a non-compete agreement is considered a restraint of trade. While these agreements are generally viewed as void under common law, they can be enforced if the employer proves the restriction is necessary to protect trade secrets, goodwill, or client connections and does not unduly restrict the employee's right to earn a livelihood. Understanding the Governing Law The primary legislation governing these agreements is the Federal Competition and Consumer Protection Act 2018. Specifically, Section 68(e) of the FCCPA provides a statutory exception for contracts of service or service provision, allowing for restrictions that do not exceed a duration of two years. This is a critical threshold. Any clause exceeding this two-year limit is likely to be struck down by the National Industrial Court of Nigeria as unreasonable and against public policy. What Constitutes a Legitimate Interest For a non-compete clause to hold up in court, it must be supported by a legitimate business interest. You cannot simply use a non-compete to prevent competition. You must demonstrate that the employee had access to sensitive information, such as proprietary trade secrets, confidential client lists, or specialized business strategies that, if used by a competitor, would cause irreparable harm to your company. Without this nexus, the court will likely view the restriction as an unlawful restraint of trade. Drafting for Reasonableness Reasonableness is the cornerstone of enforcement in Nigeria. Courts look at three main factors: the duration of the restriction, the geographical scope, and the nature of the restricted activities. A restriction that covers the entire country when your business only operates in Lagos State is likely to be deemed overbroad and unenforceable. Similarly, a restriction that prevents an employee from working in any capacity, rather than just in a competing role, will be rejected. Mandatory Particulars and Structure While there is no government-mandated form, a valid agreement must clearly identify the parties, including their full names and addresses. It must explicitly state the consideration provided for the agreement, such as continued employment or specialized training. The document should define the restricted activities with precision, ensuring the employee understands exactly what they are prohibited from doing after their employment ends. Consequences of Poor Drafting Common mistakes include drafting clauses that are too broad, failing to provide adequate consideration, or attempting to impose lifetime bans. These errors often lead to the entire clause being declared void. In the Nigerian context, the National Industrial Court of Nigeria has a history of protecting the constitutional right to work under Section 17 of the 1999 Constitution. If your agreement is seen as a tool to suppress competition rather than protect interests, it will be invalidated. Execution and Legal Best Practices While notarization is not strictly required for the validity of the contract, it is highly recommended to provide proof of execution in the event of a dispute. The agreement should be signed by both the employer and the employee. Because these agreements are contractual, they do not require government registration, but they should be kept as part of the employee's personnel file to be produced if litigation becomes necessary. Frequently Asked Questions How long can a non-compete last in Nigeria? Under Section 68(e) of the FCCPA 2018, the restriction must not exceed two years. Shorter periods like six to twelve months are more likely to be found reasonable by the courts. Are non-compete agreements always enforceable? No. They are prima facie void as restraints of trade. They only become enforceable if the employer can prove they are reasonable in scope, duration, and geography, and protect a legitimate business interest. What happens if I breach a non-compete agreement? If the agreement is valid, the employer may seek an injunction from the National Industrial Court of Nigeria to stop the breach and may claim damages for any financial loss caused by the former employee's actions. Do I need a lawyer to draft this? Given the high level of judicial scrutiny and the risk of the clause being declared void, it is strongly advised to have a legal professional review your specific circumstances to ensure the agreement is tailored to your business needs.