Non-competition and relationship clauses

non-compete and relationship clause

A non-compete clause and a relationship clause are provisions included in many employment contracts to protect employers from competition or the loss of customers when an employee leaves. These clauses restrict the employee’s freedom to work in certain positions or at certain companies after the end of their employment, or to approach business associates of the former employer. While these clauses offer protection to employers, they restrict the freedom of employees, which is why strict legal rules apply to their validity and scope.

The non-compete clause

The non-compete clause prohibits an employee from joining a competitor or starting his or her own business in direct or indirect competition with the former employer after the termination of the employment contract or during the term of the employment contract. This clause must be agreed in writing with an adult employee, and it may only be included in an employment contract for an indefinite period of time. A non-compete clause can also be included in a fixed-term employment contract, but the employer must justify the substantial business or service interest in writing.

The relationship clause

The relationship clause prohibits the employee from approaching business contacts of the former employer, such as customers or suppliers, after the end of the employment contract. This clause is less restrictive than a non-competition clause because it focuses only on specific relations, but can still limit an employee’s employment opportunities. This clause must also be in writing.

Juridical review

If a non-compete and/or relationship clause is invoked by the employer and the employee does not accept it, the employee can go to court. The judge will then assess whether the clause is proportionate to the employer’s interests and whether it does not place an unreasonable burden on the employee. If the court finds that the restriction is unreasonable, it can annul or moderate the clause in whole or in part.

Future legislative amendment

The cabinet has announced a legislative proposal to more strictly regulate the use of the non-compete clause. This proposal stems from concerns that the non-compete clause is used too often, including in situations where it is not strictly necessary, and unnecessarily hinders employment mobility.

Why hire an attorney for employers?

It is very important for employers to engage an attornet when drafting a non-compete and/or non-relationship clause.

Ensuring legal validity: I can ensure that the clause is legally valid and complies with the law. This is especially important because a wrongly worded clause can be annulled by the court.
Substantiate justification: with the advent of the new legislative proposal, the obligation to properly justify the non-compete clause becomes more important than ever.
Prevent disputes: a properly drafted and thought-out non-compete and/or relationship clause can prevent future disputes with departing employees.

Why hire an attorney for employees?

For employees facing a non-compete and/or relationship clause, engaging an attorney is crucial to protect their rights:

Review of reasonableness: I can assess whether the clause is reasonable and whether the restrictions it imposes are not unduly burdensome. If necessary, I can help challenge the clause in court.
Negotiating moderation or removal: if an employee’s ability to find a new job is restricted by a non-compete and/or relationship clause, I can help negotiate with the employer to moderate or remove the clause.
Understanding compensation: under the new law, employees may be entitled to compensation if their job opportunities are limited by a non-competition clause.

Conclusion

For both employers and employees, a non-compete and/or relationship clause can have major consequences. Employers should make sure that the clause is legally watertight and well-motivated, especially with the advent of new legislation. Employees, on the other hand, need to ensure that their rights are not unnecessarily restricted and that they are not stuck with unreasonable terms. In both cases, engaging an attorney is essential to avoid legal conflicts and to safeguard the interests of both parties.

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The information on this page is for informational purposes only and should not be considered specific legal advice. For personalized advice, please contact Ok Legal. Please note that the content of this page may change without notice and Ok Legal is not liable for any inaccuracies and/or missing information.