What is a Non-Compete Clause?

What is a non-compete clause in freelancing?

A non-compete clause (also called a non-compete agreement or restrictive covenant) is a contractual provision that restricts you from working with a client's competitors for a specified time period and geographic area after the engagement ends. In a freelance context, this means a client might prohibit you from doing similar work for their competitors for 6-24 months after your project wraps up.

For freelancers, non-competes are fundamentally different from employee non-competes. As a self-employed person, your ability to work for multiple clients in your industry is the foundation of your livelihood. A broad non-compete can effectively shut down your business.

Why non-compete clauses matter for freelancers

A non-compete directly limits your earning capacity. If you specialise in fintech and sign a non-compete preventing work with other fintech companies for a year, you've given away a massive portion of your addressable market in exchange for a single project fee.

The power imbalance is significant. Clients often include non-competes in standard contract templates without thinking about the disproportionate impact on a freelancer versus an employee. An employee gets salary, benefits, and job security in exchange for a non-compete. A freelancer gets a project fee—often for just a few weeks or months of work—and then faces restrictions that can last far longer than the engagement itself.

Enforceability varies widely by jurisdiction. Many regions are restricting or banning non-competes for independent contractors, but you shouldn't rely on unenforceability as your protection strategy.

Example

Jordan is a freelance product designer specialising in B2B SaaS. A new client's contract includes this clause:

"Contractor agrees not to provide services to any direct or indirect competitor of Client for a period of 12 months following the termination of this Agreement."

Jordan's project is worth $15,000 over 6 weeks. The non-compete would restrict their market for 12 months. Back-of-the-envelope maths:

• Potential revenue from SaaS clients in 12 months: $120,000+
• Project fee: $15,000
• Revenue at risk from non-compete: $105,000+

Jordan negotiates the clause down to:

• 3-month duration instead of 12
• Named competitors only (specific list of 5 companies) instead of "direct or indirect"
• Only applies to the specific product area worked on, not all services

This narrower scope protects the client's legitimate interests without crippling Jordan's business.

How to handle it

Read every contract before signing—non-competes often hide in standard terms. Look for "restrictive covenant," "non-compete," and "non-solicitation" language.

Negotiate scope, duration, and geography. Push for the narrowest reasonable restriction: named competitors only, shorter duration (3 months maximum for project work), and limited to the specific work performed.

Consider requesting a non-compete premium. If the client insists on restricting your market, the project fee should compensate for lost opportunity. Some freelancers add 20-50% to their rate when non-competes are involved.

Get legal advice for high-value engagements. If a major client insists on a non-compete for a large retainer, the cost of a contract lawyer's review is small relative to the risk.

Walk away if the terms are unreasonable and non-negotiable. A client unwilling to narrow a non-compete that threatens your livelihood is signalling how they view the power dynamic.

How Wiggle Room helps

Wiggle Room's client and project tracking gives you a clear picture of your revenue by client and industry segment. When evaluating a non-compete clause, you can see exactly how much revenue comes from the restricted sector—turning a gut-feel decision into a data-driven one.