Employment Regulation Collection: 04 Non-Compete Agreements In Labor Regulation – Employment and HR

To print this article, all you need to do is register or log in to Mondaq.com.

Definition of non-compete obligations

Non-compete can be viewed as of two different types; as a non-compete clause of an employee for the duration of the employment relationship and as a non-compete clause that takes effect upon termination of an employment contract. An employee’s non-compete obligation during an employment relationship is a duty of loyalty, which means that an employee will not compete to protect the legitimate interests of their employer. The fiduciary duty ends with the termination of the employment contract, the employee is not subject to any further restrictions. However, an employer may need more comprehensive and longer-term protection to prevent potential loss and disclosure in matters such as trade secrets or customer portfolios. In order to maintain the non-competition clause, an employment contract can be supplemented with a clause or a separate non-competition clause can be signed.

Non-compete clauses or non-compete clauses in employment contracts apply insofar as this is necessary to safeguard business interests. It is obvious that an unrestricted and unlimited non-competition clause largely abolishes the worker’s freedom of work. The main reason why non-compete agreements are subject to certain restrictions is to protect workers’ constitutional rights, such as freedom of employment and contract. A non-compete clause should be concluded in such a way that the economic future of an employee is not endangered.

The validity of non-compete obligations in Turkish labor law

Under the law and case law of the Supreme Court, certain conditions and various restrictions have been placed on the non-compete clause. Since there is no non-compete clause in labor law, a non-compete clause must be valid and binding if it meets the requirements of the Turkish Code of Obligations. According to Article 444 of the Turkish Code of Obligations, it is regulated that an employee who is capable of acting can undertake in writing to compete with an employer in any way, such as entering into another competitive company or entering into another interest relationship with a competing company after the termination of an employment contract. In addition, the legislature only effectively stipulates non-compete obligations if the employer provides an employee with information about the customer base or production secrets or the work of the employer and judges seek the potentially significant damage that can be caused by the use of this information.

A non-competition clause must be concluded in such a way that it does not unjustly endanger the economic future of an employee. Since the prohibition regulations are of a proportionate, mandatory nature, a decision in favor of an employee is possible, whereby the burden of proof lies with the employer. The main aim is to determine between the parties to what extent a ban is necessary to protect legitimate business interests. An indefinite and indefinite non-compete clause is not considered to be valid because it abolishes an employee’s freedom to work, therefore general and ambiguous non-compete clauses do not apply. If the scope of the non-compete clause is not clearly and specifically stipulated in the contract, it will be interpreted in favor of the employee.

How to find the proportion of proportionality in non-compete agreements

It is recognized that non-compete clauses must not contain unreasonable restrictions on the time, place and type of work that jeopardize the economic future of an employee. Such non-compete clauses may be considered void or partially void or are subject to the intervention of a judge. Therefore, the employer must determine that the terms of the contract comply with the mandatory provisions.

Regulations on the temporal, spatial and material restriction of non-compete obligations are contained in Article 445 of the Turkish Code of Obligations. The first paragraph states that the non-compete clause cannot last for more than two years, except in special circumstances and conditions. In this context, a non-compete clause can stipulate that an employee may not be in competition for a maximum of two years from the end of the employment relationship. The main purpose of this regulation is to prevent indefinite or long-term non-compete obligations.

On the spot, the agreement should make it clear in which geographic area an employee was required to avoid competition. The boundaries of the employer’s field of activity are important. The restriction may vary depending on the type of business and the purpose of the activity; Therefore, the assessment should be based on the employer’s market area and not the location of the workplace. Restrictions that go beyond the area of ​​activity are ineffective, as an employer with a ban outside of the area of ​​activity has no legitimate interest.

In terms of content, the scope of the non-competition clause is limited to the employer’s activity and the type of work. Since there is no competition for positions outside the field of activity, employers have no legitimate interest in a ban. Therefore, only the work performed by an employee during an employment relationship can be included in the scope of the non-compete clause and it can be limited to the business field in which the employer operates and the subject of the work performed.

Possible consequences of non-compete obligations

In the light of the rules and restrictions listed above, it is possible for a judge to restrict non-compete obligations. The judge is free to assess the excessive nature of a non-compete clause by reviewing all conditions and limiting the scope or duration of the prohibition, taking into account the counter-risk that the employer might reasonably have taken. If an employee violates a non-competition clause concluded in accordance with the statutory provisions, he is liable for the damage suffered by the employer and / or the agreed penalty clause. If an employee violates the non-competition clause, an employer can also demand that anti-competitive behavior be stopped. It should also be noted that excessive penalty clauses can be reduced to a reasonable level through the involvement of a judge.

graduation

The scope and limits of the non-competition clause are defined in the framework of the provisions of the Code of Obligations and certain conditions are introduced to secure the economic future of employees. Employers can only protect their legitimate interests if they comply with the specified conditions and restrictions. If this does not happen, their non-compete obligations will be deemed invalid.

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

POPULAR ARTICLES ON: Employment and Human Resources from Turkey

New guidelines for employers to implement hybrid working

Brahams Dutt Badrick French LLP

With the country behind months of lockdown restrictions, a new survey commissioned by Acas suggests that roughly half of UK employers expect an increase in staff for some or all of the time from home.

Health and safety concerns and questions

Little Mendelson

This article addresses the health and safety concerns and issues that UK employers need to consider in making the workplace “COVID Safe”.