Freelance Non-Compete Clauses: What Should You Look Out For?

What is a non-compete clause?

A non-compete clause is a contractual restriction intended to prevent you from carrying out certain work that competes with your client.

For example, a contract might say that while you're working for Client A, you cannot provide similar services to one of Client A's direct competitors.

Some clauses continue after the engagement finishes.

The practical effect depends heavily on the wording. A restriction applying only to one named competitor during a three-month project is very different from one preventing you from working with any competing business for two years after the contract ends.

The useful question is not simply:

Does this contract contain a non-compete?

It is:

What work could this clause actually stop me taking?

Non-compete, confidentiality and non-solicitation are different

These restrictions are sometimes grouped together, but they do different jobs.

Non-compete

Restricts who you can work for or what competing work you can undertake.

Confidentiality

Restricts what you can disclose or do with confidential information belonging to the client.

Non-solicitation

Usually restricts you from approaching particular customers, employees or other business relationships.

A client may have a legitimate reason to protect confidential information or commercial relationships without necessarily needing a broad restriction on your ability to work elsewhere.

Understanding what the client is actually trying to protect can therefore be useful when discussing the contract.

Why can a non-compete be a problem for freelancers?

Freelancers often deliberately specialise.

A designer may work with several hospitality businesses. A software consultant may specialise in fintech. A marketing freelancer may have multiple clients selling related products.

That means a broad restriction on working for “competitors” could affect a significant part of the freelancer's normal market.

Depending on the wording, a non-compete could restrict:

• clients you can accept;
• industries you can work in;
• services you can provide;
• relationships with existing clients;
• projects you can take after this contract ends;
• your ability to continue working within your specialist field.

The broader the restriction, the more important it becomes to understand exactly what you are agreeing to.

Non-compete red flags worth checking

The presence of one of these features does not automatically mean a clause is invalid or unreasonable.

They are simply things worth understanding before signing.

A vague definition of “competitor”

Watch for wording such as:

any business which directly or indirectly competes with the Client

If “competitor” is not clearly defined, it may be difficult to know which future clients are covered.

A restriction against working for three named competitors is much easier to understand than a restriction covering an undefined group of businesses.

A long restriction period

Check whether the restriction continues after the project ends.

Three months, twelve months and three years can have dramatically different effects on a freelancer's ability to find future work.

Ask why the stated period is necessary.

Very broad geographic coverage

Some clauses apply within a particular city, country or market.

Others apply worldwide.

For freelancers who work remotely or serve international clients, worldwide restrictions can be particularly significant.

Restrictions unrelated to the work you are actually doing

Suppose you're hired to build a client's website.

A clause preventing you doing identical website work for a named competitor is quite different from one preventing you providing any professional services to anyone in the client's industry.

Look at both:

• who you are prevented from working for; and
• what work you are prevented from doing.

Existing clients are not excluded

Check whether the wording could interfere with clients you already have.

A new contract should not accidentally put an existing commercial relationship in conflict with a restriction you've just accepted.

The restriction survives early termination

Consider what happens if the project ends early.

Could the client terminate the engagement after a short period while a lengthy post-contract restriction still applies?

The termination clause and non-compete may need to be read together.

There is no clear end point

You should be able to understand when the restriction begins and when it ends.

If that isn't obvious from the wording, it is worth asking for clarification before agreeing to it.

Questions to ask before signing

You do not need to decide whether a clause is legally enforceable in order to ask useful commercial questions about it.

Start with its practical effect.

How long does the restriction last?

Does it apply only while you're working for the client?

Does it continue afterwards?

If so, for how long?

Who counts as a competitor?

Does the agreement define a competitor?

Could the relevant businesses be named instead?

Would you know with reasonable confidence whether a future client was covered?

What work am I actually prevented from doing?

Does the restriction apply only to services similar to those you're providing under this contract?

Or could it prevent you carrying out completely different work?

Where does the restriction apply?

Is it limited to a particular geographical market?

Does it apply throughout a country?

Worldwide?

Does that scope make sense for the client's actual business?

What happens to existing clients?

If you already work for businesses in the same industry, check whether they are excluded.

Does the client need a non-compete at all?

Sometimes the underlying concern is really about:

• confidential information;
• trade secrets;
• client lists;
• approaching the client's customers;
• reusing proprietary material.

A narrower provision dealing directly with that concern may sometimes achieve the client's objective without restricting unrelated future work.

Can you negotiate a freelance non-compete?

A clause appearing in a draft contract does not necessarily mean it cannot be discussed.

If the restriction could interfere with your normal work, ask the client why it is needed and whether it can be narrowed.

Possible discussion points include:

• reducing the duration;
• naming specific competitors;
• narrowing the definition of a competitor;
• restricting only directly competing services;
• limiting the geographical scope;
• explicitly excluding existing clients;
• limiting the restriction to work involving confidential information;
• using confidentiality or non-solicitation provisions instead of a broad non-compete.

You do not necessarily need to insist that the entire clause disappears.

Making an ambiguous restriction precise can itself make a substantial difference.

Example: a broad freelance non-compete

There are several questions a freelancer might reasonably ask about this wording.

What counts as competing?

The clause does not define it.

What services are prohibited?

It appears to cover any services rather than only the work performed for this client.

Why does it apply worldwide?

The geographical restriction is not connected to a stated market.

Why does it continue for two years?

The wording does not explain why such a long post-contract restriction is necessary.

Those questions do not determine whether the clause is legally enforceable.

They do, however, expose the practical commercial effect of what the freelancer is being asked to accept.

What might a narrower restriction focus on?

If the client's genuine concern is that a freelancer could immediately perform substantially identical work for a small number of direct competitors, the parties could discuss narrowing the restriction around that concern.

For example:

• clearly identified competitors;
• substantially similar services;
• a shorter period;
• a defined market;
• work involving confidential information obtained during the engagement.

The appropriate wording depends on the contract, circumstances and applicable law.

PactRivet does not attempt to rewrite clauses as legal advice. Its purpose is to help identify the questions worth asking.

Don't read the non-compete in isolation

A non-compete can interact with several other parts of a freelance contract.

Confidentiality

Could broad confidentiality wording restrict what you can do even after the non-compete ends?

Intellectual property

Does the client claim ownership of techniques, templates or materials you normally use across multiple projects?

Termination

Can the client end the contract quickly while leaving a lengthy restriction in force?

Scope

Is the work defined clearly enough to understand what activity might later be considered competing?

Liability

What does the agreement say happens if the client alleges that you breached the restriction?

Reading these provisions together gives you a much better picture than looking at a heading labelled “Non-Compete” in isolation.

Should you sign a freelance contract with a non-compete?

There is no universal answer.

A narrow restriction that has virtually no effect on your normal work is very different from a clause that could prevent you operating within your specialist market for a substantial period.

Before signing, make sure you understand:

• what work is restricted;
• which businesses are covered;
• when the restriction applies;
• how long it lasts;
• where it applies;
• whether existing clients are protected;
• what happens if the contract ends early;
• how it interacts with the rest of the agreement.

If the potential commercial or legal consequences are significant, consider getting advice from an appropriately qualified professional.

Check what your contract actually says

Generic examples can only take you so far.

The wording in your own agreement is what matters.

PactRivet checks freelance service agreements across ten areas, including work restrictions, scope, payment, revisions, intellectual property, confidentiality, termination, liability and disputes.

It highlights wording that may deserve attention and gives you plain-English questions you can take back to the client.