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A Restrictive Covenant Agreement protects a company's business interests by legally limiting what employees can do during and after their employment. Common in Malaysian industries like technology and finance, these agreements typically prevent employees from sharing trade secrets, poaching clients, or working for direct competitors.

Under Malaysian contract law, these agreements must be reasonable in scope, duration, and geographic limits to be enforceable. For example, a restriction might prevent a sales manager from joining a competitor within Klang Valley for 12 months after leaving, but couldn't ban them from working anywhere in Southeast Asia indefinitely.

Use a Restrictive Covenant Agreement when hiring employees who will access sensitive business information or develop close relationships with your clients. This agreement becomes especially crucial for roles like senior managers, sales executives, and technical specialists who handle proprietary technology or trade secrets in Malaysia's competitive markets.

Key times to implement these agreements include during initial employment contracts, promotions to senior positions, or when employees gain access to confidential information. Malaysian courts generally enforce these agreements more readily when they protect legitimate business interests and are introduced at the start of employment rather than added later.

• Non-Compete Clauses: Prevent employees from joining competitor companies or starting competing businesses, typically limited to 1-2 years in Malaysia
• Non-Solicitation Provisions: Restrict employees from poaching clients or staff after leaving
• Confidentiality Agreements: Focus specifically on protecting trade secrets and sensitive business information
• Garden Leave Clauses: Allow employers to keep employees away from work during notice periods while still paying them
• Industry-Specific Covenants: Tailored restrictions for sectors like banking, technology, or professional services with unique competitive concerns

• Employers: Companies and organizations drafting and enforcing Restrictive Covenant Agreements to protect their business interests
• Senior Executives: Key management personnel who commonly sign these agreements due to their access to strategic information
• Legal Counsel: Corporate lawyers who draft, review, and ensure the agreements comply with Malaysian employment laws
• HR Managers: Responsible for implementing and maintaining these agreements as part of employment contracts
• Specialized Employees: Technical experts, sales professionals, and others with access to trade secrets or client relationships

• Scope Definition: Clearly identify what business interests need protection and which roles require restrictions
• Time Parameters: Determine reasonable restriction periods that Malaysian courts typically enforce (usually 6-24 months)
• Geographic Boundaries: Map out specific regions where restrictions apply, keeping them reasonable and business-relevant
• Employee Details: Gather information about the employee's role, access to confidential information, and client relationships
• Business Specifics: Document your company's legitimate interests, trade secrets, and competitive advantages that need protection
• Compliance Check: Use our platform to generate a legally-sound agreement that meets Malaysian employment law requirements

• Parties and Definitions: Clear identification of employer, employee, and key terms used throughout the agreement
• Scope of Restrictions: Detailed description of prohibited activities and protected business interests
• Duration Clause: Specific timeframe for restrictions, typically 6-24 months in Malaysian practice
• Geographic Limits: Clear boundaries where restrictions apply, keeping to reasonable market areas
• Consideration Statement: What the employee receives in exchange for accepting restrictions
• Confidentiality Terms: Specific details about protected information and handling requirements
• Enforcement Provisions: Remedies and consequences for breach, aligned with Malaysian contract law

A Restrictive Covenant Agreement differs significantly from an Agency Agreement, though both regulate business relationships in Malaysia. While restrictive covenants focus on limiting an employee's future activities to protect business interests, agency agreements establish a relationship where one party acts on behalf of another.

• Scope and Purpose: Restrictive covenants prevent specific actions post-employment, while agency agreements authorize and enable specific actions during the relationship
• Duration: Restrictive covenants typically activate after employment ends, lasting 1-2 years. Agency agreements remain active during the business relationship
• Legal Framework: Restrictive covenants fall under employment law and must be reasonable to enforce. Agency agreements operate under commercial law with broader enforcement scope
• Rights and Obligations: Restrictive covenants limit rights, while agency agreements grant rights and authority to act on behalf of the principal