Are Non-Compete Clauses Enforceable in Pakistan?

The legal position on non-compete agreements in Pakistani employment law and their enforceability in courts.

Non-compete clauses in employment contracts are subject to scrutiny under S.27 of the Contract Act 1872, which declares agreements in restraint of trade void. However, Pakistani courts have upheld reasonable non-compete clauses that are limited in scope (specific activities), geography, and duration. A non-compete clause that is too broad (covering all business activities, worldwide, for 5 years) will be struck down. Courts generally consider 6-12 months and a reasonable geographic area as enforceable. Confidentiality and non-solicitation clauses are generally easier to enforce than pure non-competes.

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