A senior employee resigns, and within weeks customers are being approached, a competing business appears, and the client list is clearly in use somewhere else.
Employers reach for the non-compete clause in the contract. In Pakistan, that clause is usually the weakest protection they hold — and the things that would actually have worked are the ones nobody put in place.
Non-compete clauses are largely unenforceable
This surprises employers, particularly those used to UK or Gulf contracts.
Section 27 of the Contract Act 1872 renders agreements in restraint of trade void, subject to narrow statutory exceptions — notably the sale of goodwill of a business. Pakistani law does not contain the "reasonable restraint" doctrine that allows carefully limited post-employment covenants to be enforced in some other jurisdictions.
The practical consequence: a clause preventing a former employee from working for a competitor, or from setting up in the same line of business after employment ends, is very difficult to enforce here. Copying such a clause from a foreign precedent gives an employer false comfort.
Restraints operating during employment stand on a different footing, as does a genuine restraint given by a seller of a business as part of the sale of its goodwill. Those are worth drafting properly.
What does protect you
Confidentiality. An obligation not to use or disclose confidential information survives employment and is enforceable. But it protects information that is genuinely confidential — pricing structures, formulations, margins, supplier terms, customer data — not the general skill and experience the employee acquired. You cannot stop someone using what they learned; you can stop them using what they took.
Define what is confidential, mark it, and restrict access to those who need it. Information everyone in the company could see is hard to call confidential later.
Intellectual property assignment. Ensure work created during employment is assigned to the company expressly. Do not rely on assumption. Software, designs, written material, drawings — these should be dealt with in the contract and in any consultancy agreement.
Company ownership of assets and accounts. The domain, the social accounts, the CRM, the customer database, the trade mark. If any of those sit in an individual's name, they will leave with them. Register the mark in the company's name — see trade mark registration in Pakistan.
Notice periods and garden leave. A meaningful notice period is enforceable in substance and is often more useful than any covenant, because it keeps the employee away from customers while the relationship is transitioned.
Non-solicitation sits in a more uncertain position than confidentiality and should not be relied on as the primary protection. Where an approach to customers involves the use of confidential information, the confidentiality route is usually the stronger argument.
Data and devices
Where an employee has copied databases, files or code, the position is considerably stronger than a pure competition complaint.
Unauthorised copying or transmission of data can engage the Prevention of Electronic Crimes Act 2016, with complaints to the FIA Cyber Crime Wing, as well as founding civil claims and an injunction. See online fraud and cybercrime complaints.
The evidence has to be secured properly and immediately: system and access logs, email forwarding records, USB and download activity, and the device itself if it belongs to the company. Do not wipe and reissue the laptop — that is where the evidence lives.
When someone resigns: the practical sequence
- Revoke access promptly — email, systems, cloud storage, shared drives, VPN
- Preserve logs first, before disabling accounts
- Recover company devices, and do not reissue them until they have been examined
- Change shared credentials and remove them from group accounts
- Confirm confidentiality obligations in writing in the exit letter
- Notify key customers of the handover before the departing employee does
- Conduct an exit interview, and record it
Most of the loss in these situations happens in the two weeks after resignation, while the employer is still being polite.
If it has already happened
Preserve evidence before confronting anyone.
Send a legal notice setting out the obligations breached and what is required — frequently effective, because former employees generally do not want litigation either. See sending a legal notice in Pakistan.
Seek an injunction where confidential information or data is being used, which is a stronger application than one framed as restraining competition.
Consider the new employer. Where a competitor has induced a breach or is knowingly using your confidential information, they may also be a proper defendant — and they usually have more to lose.
Be realistic. You are unlikely to stop a former employee working in the industry. You may well be able to stop them using your data, your customer list and your material, and to recover for the loss caused.
For employees
The mirror image. You are generally free to work in your field and to use your own skill and experience. You are not free to take the employer's confidential information, databases, or documents, and doing so exposes you to civil and potentially criminal consequences.
Leave the data behind. Take your knowledge, not their files.
How the firm can help
We draft employment and consultancy agreements that protect what is actually protectable in Pakistan — confidentiality, IP assignment, notice — rather than relying on covenants that will not hold. We also audit where a business's key assets are registered, which is frequently where the real exposure sits.
Where an employee has taken data or customers, we act quickly: evidence preservation, legal notices, injunctions, civil claims and PECA complaints. We also defend former employees facing overstated claims.
If someone has just resigned and you are concerned, contact the firm now — the first fortnight determines what can be recovered.