Hamburger
  • Legal system, currency, language

    Constitutional and civil law with certain application of case law. Pesos (ARS). Spanish.

     

  • Corporate presence requirements & payroll set-up

    A foreign entity cannot hire employees in Argentina without a local corporate presence.

    Employers must pay social security contributions (23% or 27% on top of salaries, depending on the company's activity and revenues). Employees must contribute 17% of their salaries to the social security system (to be withheld by the employer and subject to certain taxable limits). Income tax is also withheld by the employer when paying employees' salaries (maximum rate 35%, subject to a progressive scale).

    Collective bargaining agreements for certain activities provide payments to be made by the employer and/or the unionized employees to the relevant unions.

  • Pre-hire checks

    Required

    • Pre-hire medical checks are required pursuant to resolutions issued by the Occupational Hazard Superintendence. If an employee does not complete a pre-hire medical check, the employee will be deemed to have begun work in optimal health; therefore, any injuries or diseases which subsequently arise will be deemed to have happened during the employment relationship.
    • Criminal record checks are required for foreign employees to obtain a work visa.

    Permissible

    Where criminal checks are not required for work visa purposes, they are only permissible (and often done in practice) for specific roles (eg, high-level managerial positions). Reference and educational checks are common and permissible, provided applicant consent is previously obtained.

  • Immigration

    Foreigners from non-Mercosur countries must obtain a temporary residence permit that permits them to enter and work in Argentina. Temporary residency is granted for a maximum period of up to 1 year, extendable for periods of equal or shorter terms. After 3 consecutive years as a temporary resident, foreign employees are entitled to apply for permanent residence.

    Citizens of Mercosur countries can apply for temporary Mercosur residence in Argentina without the need to present a work contract to the authorities. Temporary Mercosur residence is granted for 2 years and enables the individual to work and to apply for permanent residence on expiry of the temporary residence.

  • Hiring options

    Employee

    Full-time, part-time, fixed-term, indefinite-term employees or trainees.

    The following factors tend to indicate a labor relationship: availability to work for his/her employer; an employer who directs and subordinates the individual; an employer who instructs the services and duties required and creates the individual's schedule. Courts will also look at the extent to which the worker depends economically on the employer.

    Independent contractor

    Contractors should only be engaged where there is no labor relationship, that is, no direction/subordination or economic dependence.

    Misclassification, that is failure to register an individual as an employee, or submission of an incomplete or defective registration, carries the risk of severe sanctions and fines from the authorities (including amounts owed to social security for unpaid contributions). In addition, steep fines are levied upon statutory severance, including the doubling of the amount of severance owed to a (misclassified) employee.

    Agency worker

    Employers can engage workers through agencies. Agencies must be authorized by the authorities to function as an agency.

    The employer will be jointly and severally liable with the agency for all labor obligations arising from the worker's employment.

  • Employment contracts & policies

    Employment contracts

    There is no general, legal requirement to execute employment contracts in a specific form – meaning that they can be in writing, made orally, etc. unless a specific law or collective convention applies and indicates otherwise. Notwithstanding, employers are advised to enter into a written employment contract.

    Probationary periods

    The maximum permitted duration of a probationary period is 3 months. After the end of the 3 month period, the employee will turn into an indefinite term employee.

    Policies

    The law does not require employers to have specific policies in place. Notwithstanding, there are some policies that are strongly recommended to prevent potential conflict, such as bonus policies.

    Third-party approval

    Third-party approval is not required for employment contracts or any policies.

  • Language requirements

    No statutory language requirements; however, in practice, employment contracts are drafted in Spanish.

  • Minimum employment rights

    Employees entitled to minimum employment rights

    The Employment Contract Law No. 20,744 (LCL) governs the minimum employment rights in Argentina.

    Pursuant to Article 3º of the LCL, the law governs everything related to the validity, rights and obligations of the parties, provided the employment contract is performed in Argentina, even if the contract was entered into abroad.

    The LCL applies to "workers" which covers not only employees working under an employment contract, but also other individuals who personally perform "work" or provide services for the employer.

    For this purpose, "work" should be understood as any legitimate activity that is provided in favor of someone who has the power to direct that work, through the payment of remuneration for those activities and/or services rendered.

    The main factors that will tend to indicate that an individual is an employee rather than a worker or self-employed worker, are:

    • The employee must be available to work for his/her employer
    • The employer will direct and subordinate the employee, appoint the services and duties required and order the employee to comply with a schedule

    Courts will also weigh the extent to which the worker depends economically on the income obtained from the alleged employer.

    Working hours

    The general maximum number of hours is 8 hours per day or 48 hours per week for all employed workers in public or private enterprises. Each extra hour worked above these limits is deemed to be overtime.

    Notwithstanding the foregoing, Article No. 3 of Law No. 11,544, in its subsections a), b) and c) regulates exceptions to the abovementioned maximum limitation on working hours. The limitations do not apply to employees performing duties under the form of a "job team," that is, working in a special coordinating rotation system, nor to employees performing duties in high-level positions (main managers, directors etc.).

    Overtime

    Employees in Argentina are allowed to perform overtime. Overtime will be only compulsory in cases of danger or accidents or imminent force majeure, or by exceptional demands of the national economy or the company (Article No. 203 of the LCL).

    Overtime must be paid with a surcharge of 50%, calculated using the employee's usual salary if the overtime hours were worked during business days, and 100% on Saturday after 1pm, Sunday or holidays. In no event may employees work overtime of more than, 3 hours per day, 30 hours per month or 200 hours per calendar year.

    Wages

    The national minimum wage (NMW) is updated regularly by the National Council of Employment dependent of the Ministry of Production and Labor. The NMW rate as of December 2018 is AR$11,300.

    Most CBAs also provide for a specific minimum wage applicable to employees subject to the CBA.

    Vacation

    Employees with less than 5 years seniority are entitled to 14 calendar days after 6 months of work. This increases to 21 calendar days for employees with between 5 to 10 years of seniority; 28 days for employees with between 10 to 20 years of seniority, and 35 days for employees with more than 20 years of seniority. For employees with less than 6 months of service, employers must grant 1 day of vacation per worked month. Companies should grant vacation to their employees between October 1 to April 30 of the following year.

    Sick leave & pay

    Sick/accident leave of up to 3 months per year must be provided to employees with less than 5 years of seniority, while 6 months must be granted to employees with seniority of 5 years or longer. For employees with "family dependents" (generally understood to be the immediate family that economically depends on the employee’s wage and labor benefits), these periods are doubled, to 6 and 12 months, respectively.

    Maternity/parental leave & pay

    Pregnant employees may take leave of 45 days prior to giving birth and up to 45 days after giving birth. However, the employee may choose to reduce the leave prior to giving birth, but it may not be less than 30 days, and add those days to the maternity leave period after the birth of the child. In the event of premature birth, the period of the leave that has not been enjoyed before the birth will be added to the leave period after the childbirth. Further, the employee is entitled to earn her gross remuneration (without any withholding contributions made to the social security system), during maternity leave. The ANSES (as defined below) pays the remuneration of employees during maternity leave.

    Fathers are entitled to paid leave of 2 consecutive days for the birth of his child. There is no general regulation providing other parental leave after the birth of a child. 

  • Discrimination

    The law prohibits discriminatory acts or omissions based on race, religion, nationality, ideology, political or trade union opinion, sex, economic position, social condition or physical characteristics.

    In addition, Argentina has ratified international antidiscrimination conventions, such as the Convention of Belem do Pará and the Convention on the Elimination of All Forms of Discrimination against Women.

  • Benefits & pensions

    The Social Security National Administration (Administración Nacional de la Seguridad Social, hereinafter ANSES) is the authority in charge of the administration of the social security system in Argentina, called Sistema Integrado de Jubilaciones y Pensiones (SIJP). Employers and employees are required to make contributions to the SIJP which provides for old age pension and disability benefits.

    To qualify for a statefunded pension distribution, male employees must be 65 years old, while female employees must be 60 years old. In both cases, in order to qualify for pension the employee must have contributed to the SIJP for a minimum of 30 years.

    Employers do not have a legal obligation to provide a private pension scheme for employees, as the employees are entitled to state pensions.

  • Data privacy

    The Data Privacy Law No. 24,766 sets limits to the type of personal data that may be collected by prohibiting the collection of sensitive personal data, such as data that is related to political or religious opinions, and regulates the collection, use, processing and transfer of personal data.

    Employers are allowed to monitor employee's work devices, provided the employee is duly notified in advance, and personal information is safeguarded and not disclosed.

  • Rules in transactions/business transfers

    Where there is an asset transfer that qualifies as a business transfer, all obligations arising from the employment contracts that the transferor has executed with its employees will be taken on by the transferee after the transfer. Employment contracts will continue with the transferee and the employees will retain their seniority with the transferor and the rights arising from it. Therefore, on the execution of the transfer, all employees are automatically transferred to the transferee, after their written consent has been obtained.

    Although in practice both internal consultations and collective consultation with trade unions are held before a business transfer takes place, the transferor and the transferee are not required by law to inform or consult employees on a business transfer. However, in order to perform the transfer of staff, the employee’s written consent must be given prior to the transfer. In the absence of this consent, the employee may terminate the employment, with the right to compensation.

    The transferor and the transferee will be jointly and severally liable for any dismissals that arise due to the transfer.

  • Employee representation

    Argentina is a highly unionized country with approximately 3,100 active trade unions with considerable political power. There are unions in nearly all sectors or industries.

    A trade union must be recognized by the Ministry of Production and Labor. Only recognized and authorized unions can enter into a CBA. Employers cannot recognize an unauthorized union voluntarily, not even for collective bargaining purposes.

    The National Constitution sets out collective labor rights in its Article No. 14 (bis), guaranteeing unions the right to collectively bargain and the right to strike.

    CBAs are very common in Argentina. There are different types of CBAs depending on the territory in which they are going to be enforceable. Some CBAs only govern employees within one specific company, whereas other CBAs govern employees performing certain activities in a geographical region or industry.

  • Termination

    Grounds

    Cause is not required for termination of employment; however, it is required to avoid payment of statutory severance. There is no exhaustive and/or exemplary list of behaviors that constitute cause for dismissal; therefore, whether a dismissal is with or without cause will depend on judicial judgment on a case by case basis. 

    Who is subject to termination laws?

    All employees.

    Prohibited or restricted terminations

    Public employees and union delegates cannot be dismissed without cause and without complying with the statutory procedure for these terminations. All other employees can be dismissed with payment of statutory severance, which will differ based on the case (maternity, illness, etc.)

    Pregnant employees are protected from dismissal. If a pregnant employee is dismissed within the period of 7-1/2 months before or after the date of childbirth, the pregnancy will be considered to be the cause of the dismissal, entitling the employee compensation for the discrimination equivalent to their annual salary, in addition to the applicable severance payment.

    Further, if a dismissal occurs 3 months before the marriage of an employee, or 6 months after it, the dismissed employee will be entitled to a special compensation.

    In order to dismiss employees on sick leave, employers must pay a special severance (full severance payment applicable for dismissal without cause, plus the salary which would be payable for the entire period the illness would be expected to last, according to medical opinion).

    Third-party approval for termination/termination documents

    Under Decree No. 1043/18 (effective as of November 14, 2018), employers wishing to dismiss indefinite term employees without cause must notify the Ministry of Production and Labor at least 10 business days before the decision goes into effect. This Decree is effective through March 31, 2019.

    As this decree was issued recently, there is no administrative or judicial case law interpreting the Decree.

    Mass layoff rules

    Prior to a mass dismissal, an employer must provide notice to the respective trade union that regulates the employer's industry. Collective consultation may be required depending on employee headcount.

    Prior to executing or communicating dismissals or suspensions due to force majeure, economic or technological causes that affects more than:

    • 15% of the employees where total headcount is less than 400
    • 10% of the employees where total headcount is between 400 and 1,000 and
    • 5% of the employees where total headcount is greater than 1,000

    Employers must comply with the Preventive Procedure of Companies Crisis (PPC) before the Ministry of Production and Labor. During this procedure, the company will engage in negotiation with the respective union acting on behalf of their members. The aim of this procedure is to avoid business shutdowns or bankruptcy. After the company files the request at the Ministry of Production and Labor, the Ministry will forward the claim within 2 business days of the filing to the other party for its response. After a response is made, a settlement hearing will be scheduled within the next 5 business days. If a settlement is not reached, the Ministry will open a "negotiating period" that must not extend beyond 10 business days. If the parties still do not reach to an agreement within that period, the PPC process will conclude. Notwithstanding this, in practice, this procedure normally takes longer than the law sets out.

    Notice

    In order to proceed with termination, employers must give notice to employees before the dismissal. 

    The term of this notice will depend on the seniority of employees:

    • During their probationary period, notice must be given to employees 15 days before termination
    • In order to dismiss employees who have completed the probationary period but who have less than 5 years of seniority, notice must be given 1 month prior to the dismissal and
    • Employees with more than 5 years' seniority must receive 2 months' notice before their dismissal

    Statutory right to pay in lieu of notice or garden leave

    Employers are permitted to pay in lieu of notice. Current legislation does not regulate nor prohibit garden leave.

    Severance

    An employee who is dismissed without reasonable cause is entitled to statutory severance of 1 month's salary for each year of service, or period longer than 3 months. This amount is calculated using the employee's highest monthly, regular compensation received in the last 12 months of work. This baseline cannot be more than 3 times the "monthly payment," which is the average of all compensation set out in the applicable CBA at the time of the dismissal (this average is periodically published). The Ministry of Production and Labor governs the updating of this average for every authorized trade union.  

    If the employee is not subject to a CBA (typically, senior employees), the limits applicable to the activity in which he/she performs duties will apply. In no case will the amount of the compensation payable be less than 1 month of real salary.

    Currently, in the Vizotti case, the Supreme Court of Justice has raised the basis for calculating compensation subject to a limit, establishing that it will be 67% of the employee's monthly and usual compensation, the amount to be multiplied by the years of service of the employee, based on constitutional reasons and in cases where the application of the legal limit imposes a reduction to the severance payment of more than 33%.

    This severance payment may be reduced or increased in other types of termination (eg, force majeure and lack or reduction of work; death of the employee; employer's bankruptcy; employee's retirement; employee's illness; employee's pregnancy; etc.)

  • Post-termination restraints

    Non-compete, customer non-solicitation and employee non-solicitation clauses are often used, especially when the employer and employee negotiate the terms and conditions of the termination of the employment.

    Restrictive covenants are capable of being enforced post-employment, provided the employee receives compensation for the restrictions. Therefore, consideration is required for valid restrictive covenants. The amount must be fair and in accordance with the salary of the employee, his/her position in the company, the agreements that the company intends to impose and the extent (period and territory) of the restrictive covenant.

    The law does not specifically regulate restrictive covenants. However, most restrictive periods range between 2 years to 5 years. However, under certain circumstances the court has enforced a 10 year post-termination restraint period, based on the business and the amount of consideration paid to the employee.

    Where an employee is in breach of an agreement, the employer can file a claim against the employee in court requesting compensation for damages. The complaint may include injunctive relief to stop the violation immediately. Alternatively, courts may declare the covenant null and void if it has been drafted too widely.

  • Waivers

    Pursuant to the LCL, any executed agreement that suppresses or reduces rights granted by the LCL, labor laws related to specific industries, collective agreements or individual employment contracts, either at the time of their agreement or execution, or the exercise of the rights arising from its termination, shall be null and void.

  • Remedies

    Discrimination

    Compensation is available as a remedy for discrimination or harassment. In case the event of a complaint based on harassment, the employee can file a claim requesting the payment of the statutory severance payment applicable to dismissals without cause and an additional amount for the pain and/or emotional distress caused by the harassment.

    Employers are liable for the acts of their employees. Therefore, the employer and the harasser will be declared jointly and severally liable for the payment of any compensation granted to the victim.

    Unfair dismissal

    Employees may challenge a dismissal without cause within 2 years of the dismissal and seek payment of statutory severance, plus interest and court fees. The complaint must be filed before the labor courts.

    Failure to inform & consult

    Not applicable for terminations as there are no consultation obligations.

  • Criminal sanctions

    Breaches of labor law do not entail a criminal breach or sanction unless such a breach or offense is specifically regulated by the National Criminal Code as a crime. In that case, criminal sanctions will be applied for the breach of criminal law and not for the breach of labor law.

  • Key contacts
    Osvaldo Jofre
    Osvaldo Jofre
    Cordova Francos [email protected]

Post-termination restraints

Argentina

Non-compete, customer non-solicitation and employee non-solicitation clauses are often used, especially when the employer and employee negotiate the terms and conditions of the termination of the employment.

Restrictive covenants are capable of being enforced post-employment, provided the employee receives compensation for the restrictions. Therefore, consideration is required for valid restrictive covenants. The amount must be fair and in accordance with the salary of the employee, his/her position in the company, the agreements that the company intends to impose and the extent (period and territory) of the restrictive covenant.

The law does not specifically regulate restrictive covenants. However, most restrictive periods range between 2 years to 5 years. However, under certain circumstances the court has enforced a 10 year post-termination restraint period, based on the business and the amount of consideration paid to the employee.

Where an employee is in breach of an agreement, the employer can file a claim against the employee in court requesting compensation for damages. The complaint may include injunctive relief to stop the violation immediately. Alternatively, courts may declare the covenant null and void if it has been drafted too widely.

Australia

Those that protect the employer's legitimate business interests can be enforced to the extent reasonably necessary to protect those interests in all the circumstances.

Non-competes

Typically no longer than 12 months (with some exceptions).

Customer non-solicits

Permissible.

Employee non-solicits

Permissible.

Austria

Those that protect the employer's legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees.

Non-competes

For special employees with a higher income permitted, but not longer than 12 months. If the non-competition clause is valid and enforceable (depending if (i) the employee terminates the employment or if (ii) the employment relationship has been terminated by the employer for good reason with immediate effect or if (iii) the employee has terminated the employment with immediate effect without good reason), there is no requirement for payment during the non-competition period. If it is not enforceable (eg, if the employer terminates the employment without good reason), the employer may pay the salary during the non-competition period in order to make the non-competition clause enforceable.

Customer non-solicits

Permissible in narrow circumstances.

Employee non-solicits

Permissible.

Bahrain

It is permissible to have restrictive covenants contained in the contract of employment to the extent necessary to protect the legitimate interests of the employer, provided the nature of the employee's work must have allowed them to know the company's clients and/or know the secrets of the business.

The covenants must be restricted in relation to their duration (which must not exceed 1 year), geographical scope and the nature of the business to be protected.

Parties are permitted to include a liquidated damages clause in the contract of employment, as it is difficult to obtain an injunction in Bahrain, but contractual provisions imposing a penalty (rather than a genuine estimate of the loss incurred) are likely to be unenforceable.

Non-competes

Typically no longer than 6 to 12 months.

Customer non-solicits

Typically no longer than 6 to 12 months.

Employee non-solicits

Permissible.

Belgium

Those that protect the employer's legitimate business interests can be enforced if reasonable.

Non-competes 

Strict conditions. In principle no longer than 12 months. Non-compete indemnity due equal to 1/2 of the remuneration due for the period of non-compete obligation, except for a non-compete in an employment contract for sales representatives.

Customer non-solicits 

Permissible, but only enforceable if reasonable.

Employee non-solicits

Permissible, but only enforceable if reasonable.

Brazil

Brazilian law does not address post-termination restraints, so enforcement of post-termination restraints can be challenging.

Non-competes

Periods of up to 24 months have been accepted, but enforceability is more likely for shorter periods (6-12 months). Case law has upheld non-competes that were limited with regards to scope, territory, timeframe and fair and reasonable payment.

Customer non-solicits

Generally permissible.

Employee non-solicits

Generally permissible, but case law is very scarce in this regard.

Canada

These are increasingly difficult to enforce. Restrictions must go no further than necessary to protect the employer's legitimate business interests. Garden leave is becoming more common. 

Non-competes

Will generally not be enforceable for mere employees and not where a non-solicitation provision would have been sufficient. Must be reasonable in scope geographically and temporally, and in some jurisdictions, must also specify the type of restricted employment and the restricted job functions. Must be clear and unambiguous. A requirement not to interfere with business relationships might also be enforced if it is reasonable, clear and unambiguous. 

Customer non-solicits

More likely to be enforced than a non-competition agreement, non-solicitation agreements must still be reasonable in scope geographically and temporally. Must be clear and unambiguous. 

Employee non-solicits

Likely to be enforced if reasonable, clear and unambiguous.

Chile

It is not against Chilean law to include post-termination restraints in an employment contract. However, since the Chilean Constitution explicitly protects an employee's right to work, courts may be unwilling to enforce such kind of restraints. 

Non-competes

Technically not prohibited, but may be difficult to enforce because of the constitutional protections identified above.

So far, the only post-termination non-competes accepted by the courts are those that provide compensation to the employee to compensate for the prohibition against competing. There are no clear parameters of the amount of the bonus and the maximum term of the non-compete, however a maximum term of 2 years is customary.

Customer non-solicits

Technically not prohibited, but may be difficult to enforce because of the constitutional protections identified above. A customer non-solicit may need to rise to the level of unfair competition in order for a court to enforce the clause. 

Employee non-solicits

Technically not prohibited, but may be difficult to enforce because of the constitutional protections identified above.

China

Those that protect the employer's legitimate business interests can be enforced if reasonable.

Non-competes

No more than 2 years. Compensation is required per local rules.

Customer non-solicits

Permissible, but relatively difficult to enforce.

Employee non-solicits

Permissible, but relatively difficult to enforce.

Colombia

Non-competes

Post-termination non-compete clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect or create a sense of moral obligation on the part of an employee.

Customer non-solicits

Post-termination customer non-solicits clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect or create a sense of moral obligation on the part of an employee.

Employee non-solicits

Post-termination employee non-solicits clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect or create a sense of moral obligation on the part of an employee.

Czech Republic

Only non-compete clauses are regulated by Czech law. Enforceability of other restrictive covenants is uncertain but should be permissible if reasonable, proportionate and tailored to the situation of the particular employee. Garden leave is not expressly regulated but increasingly common.

Non-competes

Permissible subject to compliance with statutory conditions (ie, maximum duration of 1 year; obligatory compensation of a minimum of one half of average earnings per month; justifiability given the position of the employee; obligatory written form).

Customer non-solicits

Not regulated. Enforceability is uncertain but should be permissible if reasonable, proportionate and tailored to the situation of the particular employee.

Employee non-solicits

Not regulated. Enforceability is uncertain but should be permissible if reasonable, proportionate and tailored to the situation of the particular employee.

Denmark

Non-competes

Under the Danish Act on Employment Clauses that entered into force on January 1, 2016, an employee may be subject to a non-competition clause only if he or she holds a very special position of trust, and the clause must indicate the specific circumstances as to why such a clause is necessary.

The compensation is either 40% or 60% of the monthly salary at the time of employment termination, and the first 2 months are considered minimum compensation. The compensation (save for the minimum compensation) may be reduced to 16% or 24% if the employee gets another suitable job.

For agreements entered into prior to January 1, 2016, a salaried employee may only be subject to a non-competition clause if he or she holds a trusted position, for instance if he or she has access to certain, otherwise restricted, information.

Customer non-solicits

After January 1, 2016, an employee may only be subject to a non-solicitation clause regarding customers and business connections with whom the employee has had business relations over the last 12 months immediately prior to the termination of employment. The compensation regime which applies for non-competes also applies to customer non-solicits.

Employee non-solicits

Since 1 January 2016, new rules have reduced employers' ability to use non-poaching and non-solicitation of employees' clauses. Pre-existing clauses are only enforceable if each of the employees whose employment opportunities are affected by the non-hire clause have been informed of the scope of the clause and have given their written consent. In addition, they must each receive compensation (50% of the remuneration during the restricted period) as stipulated in the relevant legislation.

Finland

Non-competition

According to the Employment Contracts Act, a post-termination non-competition obligation is possible for a particularly weighty reason related to the operations of the employer or to the employment relationship. The obligation may limit the employee's right to conclude an employment contract with a competing employer, and also the employee's right to engage in competing operations on his or her own account for a maximum of six months when no compensation is paid and up to one year should the employee be compensated. The restriction concerning length of the obligation is not applied to employees who, in view of their duties and status, are deemed to be engaged in the direction of the company, corporate body or an independent part thereof.

Non-solicitation

Non-solicitation of customers or employees is not regulated by the law. However, such covenants are possible and common. According to the case law, such covenants are comparable to non-competition obligations, and therefore subject to the same requirements.

Confidentiality

Post-termination confidentiality clauses are not regulated in the law, but such covenants are common.

France

Restrictive covenants are allowed if justified by the company's business and employee's role.

Non-competes

Allowed under 5 conditions: it must:

  • Be essential to the protection of the company's legitimate interests
  • Be limited in time
  • Be limited in space
  • Take into account the specificities of the employee's duties
  • Provide for a financial compensation (commonly at least 33% of the employee's compensation for the duration of the non-compete, but depends on the applicable CBA). CBAs may provide for specific terms.

Customer non-solicits

No legal requirement for a financial compensation, although their validity is currently challenged by the courts, which often consider that they in fact constitute a non-compete restriction and as such should be duly compensated.

Employee non-solicits

Allowed.

Germany

Need to be in writing. Those that protect the employer's legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees.

Non-competes

Typically no longer than 6-12 months, with a statutory maximum of 2 years. Compensation of 50% of the employee's wages required during the non-compete period.

Customer non-solicits

Permissible in narrow circumstances.

Employee non-solicits

Permissible only if related to illegal poaching; an agreement not to hire employees from a certain business is not enforceable.

Hong Kong

Those restraints that protect the employer's legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees.

Non-competes

Typically no longer than 3-6 months.

Customer non-solicits

Permissible in limited circumstances. Typically no longer than 6-12 months.

Employee non-solicits

Permissible in limited circumstances. Typically no longer than 6-12 months.

Hungary

Post-termination restraints are common in Hungary for employees in senior positions in order to protect the employer's economic interests for a period post-termination. Such restraints should always be tailored to individual employees.

Non-competes

Permissible for up to 2 years, if specifically included in the parties' agreement, if reasonable in geographical reach and scope, and if the employer pays a sufficient amount of compensation in exchange which, for restraints entered into after July 1, 2012, must be at least 1/3 of the employee's salary.

Customer non-solicits

Permissible, if included in the parties' agreement. Compensation is payable, but since separate compensation is not required for each different type of covenant, compensation for a non-compete will also cover a customer covenant.

Employee non-solicits

Permissible, if included in the parties' agreement. Compensation is payable, but since separate compensation is not required for each different type of covenant, compensation for a non-compete will also cover an employee covenant.

India

Non-competes

The Indian Contract Act 1872 provides that every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is void. Therefore, non-competition clauses which operate during the course of employment are generally not regarded as restraint of trade. However, post-termination non-competition clauses are void and unenforceable.

Customer non-solicits

Possibly enforceable. With post-termination non-dealing/non-solicit provisions, it can be argued that a restriction on activities with customers is a restraint of trade, if by complying the former employee is prejudicially affected from carrying out any trade. Whether such a clause is enforceable or not is, therefore, dependent on the facts of the case.
Non-solicitation provisions, even if they are upheld, generally only entitle the employer to damages, and it is highly uncommon for an Indian Court to grant an injunction preventing the customer from taking his/her business elsewhere. At best, a claim for damages may succeed against the employee for breach of their contractual agreement if the employer can show that the enforcement of the provision is essential to protect its confidential information as well as that the provision does not prejudice the former employee's ability to carry on a business/ trade and therefore is not in restraint of trade.

Employee non-solicits

Non-solicitation provisions in relation to other employees can be enforced against a former employee but the courts will not generally grant injunctive relief restraining the employees who are being solicited from leaving the company.

Indonesia

Enforceable by virtue of the principle of freedom of contract, adopted in the Indonesian Civil Code. However, in practice they are very difficult (and sometimes impossible) to enforce.

Non-competes

Permissible in theory, but very difficult (and likely impossible) to enforce.

Customer non-solicits

Permissible in theory, but may be difficult to enforce.

Employee non-solicits

Permissible in theory, but may be difficult to enforce.

Ireland

Considered to be in restraint of trade and void. However, those that protect the employer's legitimate business interests can be enforced if reasonable. Need to be tailored for the specific business and the risks posed by the employee. Garden leave is common for senior employees.

Non-competes

Permissible in narrow, justifiable circumstances. Typically no longer than 3-6 (maximum of 12) months, depending on the circumstances.

Customer non-solicits

Permissible in specific circumstances. Typically no longer than 3-6 (maximum of 12) months, depending on the circumstances.

Employee non-solicits

Permissible. Length of restriction will depend on the circumstances.

Israel

Non-competes

Although common, generally not enforceable under current Israeli case law.

Customer non-solicits

Permissible. Typically not longer than 12 months.

Employee non-solicits

Permissible. Typically not longer than 12 months.

Italy

Those that protect the employer's legitimate business interests can be enforced if reasonable.

Non-competes

Typically no longer than 6-12 months. To be valid and enforceable, such clauses must be agreed in writing and limited in scope, territory, time (up to 3 years; 5 years for executives), and must provide an adequate compensation (usually around 25% to 50% of the annual salary for a 1-year non-compete for the entire Italian territory). If such requirements are not met, the clause is null and void.

Customer non-solicits

Permissible.

Employee non-solicits

Permissible.

Japan

Generally enforceable provided that they are reasonable in scope and duration. Japanese courts will closely examine issues such as the geographic scope, whether the restraint is necessary to protect a legitimate business interest and whether consideration was given to the employee.

Non-competes

Generally permitted subject to the limitations noted above, and non-competition covenants should satisfy at least the following conditions in order to be held enforceable:

  • The duration needs to be reasonable*
  • A reasonably limited geographical scope
  • The types of jobs or businesses subject to the restriction are limited to jobs or businesses that compete directly or indirectly with the former employer's actual business
*No maximum is set by law, but 6 months to 1 year is common.

Customer non-solicits

Generally permitted, but enforceability will depend on the facts of the given case.

Employee non-solicits

Generally permitted, but enforceability will depend on the facts of the given case, since employees have a constitutional right to move to another company.

Kenya

Generally not enforceable. However, those that protect the employer's legitimate business interests can be enforced if reasonable. Need to be tailored for the specific business and the risks posed by the employee.

Non-competes

Permissible during employment, but only enforceable in narrow, justifiable circumstances post-termination. Usually contractually agreed upon between the employer and employee.

Customer non-solicits

Permissible during employment, but only enforceable in narrow, justifiable circumstances post-termination. Usually contractually agreed upon between the employer and employee.

Employee non-solicits

Permissible during employment, but only enforceable in narrow, justifiable circumstances post-termination. Usually contractually agreed upon between the employer and employee.

 

Kuwait

It is permissible to have restrictive covenants contained in the contract of employment, provided that the employee has become acquainted with the employer's clients or the secrets of the business and the covenants are reasonably drafted in relation to their duration, geographic scope and the nature of the business to be protected.

Parties are permitted to include a liquidated damages clause in the contract of employment as it is generally not possible to obtain an injunction in Kuwait, however any such penalty should not be exorbitant.

Non-competes

Typically no longer than 12-24 months.

Customer non-solicits

Typically no longer than 12-24 months.

Employee non-solicits

Permissible.

Luxembourg

Non-competes

A non-compete clause must be in writing, and is deemed null and void when the employee signing the contract of employment is under 18 years of age and/or if the employee's annual remuneration when he or she leaves the employer does not exceed €55,518.22 (index 814.40).

A non-compete clause is only valid if it anticipates an employee working as an independent contractor. The non-compete clause is only effective if the restriction:

  • Applies to a specific professional sector and to similar activities to those carried out by the former employer
  • Does not exceed 12 months
  • Is limited to a geographical area where the employee would be in a position to effectively compete with his or her former employer and taking into consideration the nature and scope of the relevant activities

Customer non-solicits

Valid under Luxembourg law to the extent that they do not aim at limiting the employee's right to work as provided for in the Luxembourg constitution.

Employee non-solicits

Valid under Luxembourg law to the extent that they do not aim at limiting the employee's right to work as provided for in the Luxembourg constitution.

Malaysia

Non-competes

Void and unenforceable pursuant to Section 28 of the Contracts Act 1950, as the former employee is "restrained from exercising a lawful profession, trade, or business."

Customer non-solicits

Valid and enforceable only to the extent that there has been a breach of contractual clauses in respect of confidentiality, confidential information, or trade secrets.

Employee non-solicits

Valid and enforceable only to the extent that there has been a breach of contractual clauses in respect of confidentiality, confidential information, or trade secrets.

Mexico

Non-competes

Post-termination non-compete clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect and even create a sense of moral obligation on the part of an employee.

Customer non-solicits

Post-termination customer non-solicit clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect and even create a sense of moral obligation on the part of an employee.

Employee non-solicits

Post-termination employee non-solicit clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect and even create a sense of moral obligation on the part of an employee.

Morocco

Non-competes

Permitted if limited in time and space. Usually 1 year maximum and 200 km maximum surrounding the place of work.

Customer non-solicits

Permitted if limited in time. Usually 1 year maximum.

Employee non-solicits

Permitted if limited in time. Usually 1 year maximum.

Mozambique

It is permissible to have restrictive covenants in the employment contract related to confidentiality, non-compete and non-solicitation after termination of the contract. However, there is no precedent where these kinds of clauses have been discussed in a court in Mozambique. In principle, these kinds of clauses would not be reviewed by a labor court, but rather by a civil court.

Non-competes

Permissible although not commonly enforced.

Customer non-solicits

Permissible although not commonly enforced.

Employee non-solicits

Permissible, but not common.

Myanmar

Non-competes

The labor legislation does not regulate non-compete clauses; employers may include such provisions in employment documentation. Sometimes their inclusion might raise issues at the time of registration of the contract with the TLO.

Customer non-solicits

These provisions are often included in executive level employment contracts, but are not regulated by law and sometimes raise issues at the time of registration of employment contracts with the TLO.

Employee non-solicits

Same as customer non-solicits.

Netherlands

Non-competes

Post-employment restraints to protect against competition are common in the Netherlands and are included in almost every employment agreement. Typically, such restraints remain in effect for up to one year after termination of employment. Non-competition clauses in fixed-term employment contracts are not allowed, unless they are necessary to protect a legitimate business interest and the business interests are clearly described in the employment agreement.

No payment required for enforceability.

Customer non-solicits

Permissible under the same conditions as described above under Non-competes.

Employee non-solicits

Permissible.

New Zealand

Restraints in New Zealand are enforceable only if the restriction is no more than is reasonably necessary to protect the legitimate proprietary interests of the employer.

Non-competes

Permissible.

Customer non-solicits

Permissible.

Employee non-solicits

Permissible.

Nigeria

Non-competes

A post-termination non-compete is only enforceable if it is reasonable with reference to the interest of the parties concerned and of the public. In deciding the question of reasonableness, the courts consider the nature of the trade or occupation, the geographical area over which the restraint is imposed, and the length of time for which it is to continue.

Customer non-solicits

A post-termination customer non-solicit is only enforceable if it is reasonable with reference to the interest of the parties concerned and of the public. In deciding the question of reasonableness, the courts consider the nature of the trade or occupation, geographical area over which the restraint is imposed, and the length of time for which it is to continue.

Employee non-solicits

A post-termination employee non-solicit is only enforceable if it is reasonable with reference to the interest of the parties concerned and of the public. In deciding the question of reasonableness, the courts consider the nature of the trade or occupation, geographical area over which the restraint is imposed, and the length of time for which it is to continue.

Norway

Non-competes

Permissible. No longer than 12 months. Must be in writing.

Customer non-solicits

Permissible. Length of restriction will depend on the circumstances.

Employee non-solicits

Permissible between employee and employer. Generally not permissible between employers, except for up to six months in relation to the sale of businesses.

Oman

It is permissible to have restrictive covenants contained in the contract of employment, provided that:

  • The employee has become acquainted with the employer's clients or the secrets of the business
  • The covenants are reasonably drafted in relation to their duration, geographic scope and the nature of the business to be protected

Parties are permitted to include a liquidated damages clause in the contract of employment as it is not possible to obtain an injunction in Oman. 

Article 661 of Royal Decree No. 29/2013 issuing the Civil Transactions Law of Oman (CTL) states that:

  • If the work of the employee is such as to permit him or her  access to work secrets or to make acquaintance with the customers of the business, both parties can agree that the employee may not  compete with the employer or  engage in an employment which competes with it after the termination of the contract, provided that such agreement shall not be valid unless it is:
    • Limited in time
    • Restricted as to place
    • Specific as to the type of work the employee can undertake, all as necessary to protect the lawful interests of the employer
  • It shall not be permissible for the employer to rely on a non-compete agreement if it terminates the contract without justification (ie, there is no action on the part of the employee justifying termination), and likewise it shall not be permissible for the employer to rely on the agreement if it commits any act which justifies the employee's resignation in response (ie the employer's action justifies the employee terminating the contract).

Non-competes

Typically no longer than 6 to 12 months.

Customer non-solicits

Typically no longer than 12 to 24 months.

Employee non-solicits

Permissible. Typically no longer than 12 to 24 months.

Philippines

An employer, in the exercise of its management prerogative, may insist on an agreement with an employee for certain prohibitions to take effect after the termination of the employer-employee relationship.

Non-competes

Employer and employee are free to stipulate in an employment contract prohibiting the employee within a certain period from and after termination of his or her employment from

  • starting a similar business, profession or trade or
  • working in an entity that is engaged in a similar business that might compete with the employer

There must be a limitation as to time, place and trade. Courts have found a 2 year prohibition reasonable.

Customer non-solicits

A non-solicitation clause may be a stipulation agreed upon by the employer and employee in an employment contract.

Employee non-solicits

A non-recruitment or anti-piracy clause is likewise a stipulation that may be agreed upon by the employer and employee in an employment contract.

Poland

Post-termination restraints, in particular the confidentiality obligation, result from the statutory provisions or are imposed on the employee upon the separate agreement between the parties. Contractual post-termination covenants are relatively common in Poland in relation to employees who, during their employment, have access to particularly important information (eg, senior executives).

Non-competes

Parties to an employment relationship can enter into a non-compete agreement which will be effective during the term of employment, as well as after the employment relationship has ceased. A non-compete agreement must be concluded in writing in order to be valid. A non-compete agreement effective after the termination of employment must specify the period of prohibition of competition, the scope of the non-compete restriction and the amount of compensation due to the employee. The compensation must not be lower than 25% of the remuneration received by the employee prior to the termination of the employment relationship for a period corresponding to the period of validity of the prohibition of competition. Polish law allows such compensation to be paid in monthly instalments.

Customer non-solicits

Statutory prohibition to induce the employer's clients to terminate, not to fulfil or improperly fulfil their contractual duties with an aim for the inducing person to gain benefits for him/herself or for a third party or to cause damage to the employer.

Employee non-solicits

Statutory prohibition to induce the person performing work for the employer not to perform or improperly perform his/her contractual duties with the aim for the inducing person to gain benefits for him/herself or for a third-party or to cause damage to the employer.

Portugal

Post-termination restraints aimed to protect the employer's legitimate business interests can be enforced, provided that the activity carried on by the employee may cause a potential loss to the employer.

These types of obligations can be included in the initial employment contract, or can be part of a specific written agreement mandatorily containing:

  • An undertaking on non-competing and/or non-solicitation by the employee
  • The scope of the obligation (activity, territory)
  • The period of the limitation (the legal maximum is 2 years – 3 years in cases of jobs of trust or jobs with access to information of particular relevance)
  • The amount to be paid to the employee during the period of the limitation – the law does not provide any criteria, but usually it varies between 50% and 80% of the last monthly remuneration

In case these legal requirements are not fulfilled, the employee shall not be validly bound.

Non-competes

Permissible under the above-mentioned rules.

Customer non-solicits

Permissible under the above-mentioned rules.

Employee non-solicits

Permissible under the above-mentioned rules.

Qatar

It is permissible to have restrictive covenants contained in the contract of employment to the extent necessary to protect the legitimate interests of the employer, provided the nature of the employees’ work allowed them to know the company's clients and/or know the secrets of the business.

The covenants must be restricted in relation to duration (which must not exceed 2 years), geographical scope and the nature of the business to be protected.

Non-competes

Typically no longer than 6 to 12 months.

Customer non-solicits

Typically no longer than 6 to 12 months.

Employee non-solicits

Permissible.

Romania

Non-competes

The parties may negotiate a post-termination non-compete clause prohibiting the employee from performing an activity competing with the one performed for his or her (previous) employer.

In order to be valid, a non-compete clause must specify certain minimum content as required by the Romanian Labor Code:

  • The prohibited activities
  • The amount of the non-competition indemnity
  • The duration of the prohibition
  • The third parties for which the employee cannot perform the prohibited activities
  • The prohibited territory

As a non-compete restraint represents an exception from the principle of freedom of work, failure to comply with the legal conditions for implementing such a clause may render the clause void.

Customer non-solicits

Not expressly regulated by the law. May arguably be included within the scope of a non-compete clause.

Employee non-solicits

Not expressly regulated by the law. May arguably be included within the scope of a non-compete clause.

Russia

Generally unenforceable.

Non-competes

Generally unenforceable.

Customer non-solicits

Generally unenforceable.

Employee non-solicits

Generally unenforceable.

Saudi Arabia

Those restraints that protect the employer's legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees.

Non-competes

Non-compete clauses will be honored as long as they are in writing and specified in terms of place, duration (no longer than 2 years) and type of work. If there is no written agreement, or an express non-compete clause is included in an employment contract, the law will not impose any restrictions.

Customer non-solicits

Permissible in narrow circumstances.

Employee non-solicits

Permissible.

Singapore

Covenants in restraint of trade are prima facie void in Singapore. They will only be considered enforceable if they can be shown to protect legitimate proprietary interests of the employer, and go no further than is reasonably necessary to protect those interests (especially in duration and geographical area of coverage). The courts have recognized three legitimate proprietary interests thus far: an employer's trade secrets and confidential information, the protection of trade connections, and the maintenance of a stable trained workforce.

Non-competes

Not enforceable, unless they can be shown to be necessary to protect the employer's legitimate business interests, and to be reasonable. Non-competes are also generally not enforceable if there are other clauses binding the employee that already protect the employer’s three legitimate interests, although this position may be changing.

Customer non-solicits

Enforceable, subject to the above and strict limitations. Such post-employment restraints may be enforced by courts if:

  • Necessary to protect the employer's legitimate business interests
  • Reasonable – both in the interests of the parties and in the interests of the public (eg, should relate to customers that the employee dealt with or had influence over, and be reasonable in duration and geographical area)

Employee non-solicits

Enforceable, subject to strict limitations. A post-employment restraint may be enforced by the courts if it is:

  • Necessary to protect the employer's legitimate business interests
  • Reasonable − both in the interests of the parties and in the interests of the public (eg, should relate to certain categories of employees that the employee dealt with or had influence over, and be reasonable in duration and geographical area of coverage)

Slovak Republic

Non-competes

Where an employee may acquire information or knowledge that is not normally available and the use of which could cause substantial harm to the employer, the parties may agree in the employment contract that, for a maximum of one year after termination of employment, the employee shall not pursue any gainful activity which is competitive in character with the employer's activity.

The employer must provide appropriate financial compensation to the employee in the amount of at least 50% of the employee's average monthly earnings for each month of the commitment. The employee and the employer may agree in the employment contract on appropriate financial compensation which the employee is obliged to pay if he/she breaches the agreed obligation.

Customer non-solicits

Customer non-solicits are not regulated by the Slovak Labor Code, and therefore, their enforceability is questionable. Furthermore, if agreed, they usually serve only as a deterrent. Soliciting of customers cannot be sanctioned (eg, by a contractual penalty), as the Slovak Labor Code does not permit this.

Employee non-solicits

Employee non-solicits are not regulated by the Slovak Labor Code, and therefore, their enforceability is questionable. Furthermore, if agreed, they usually serve only as a deterrent. Soliciting of employees cannot be sanctioned (eg, by a contractual penalty), as the Slovak Labor Code does not permit this.

South Africa

In principle, enforceable, with the party seeking to escape its effect having the onus of proving that the restraint ought not to be enforced, for being against public policy. The enforcing party must, however, be able to show a protectable interest, and the limitations to competition must not go beyond what is reasonably necessary to protect such legitimate business interest. Protectable interests include client relationships and trade secrets.

Non-competes

Permissible, in principle, if the employer has a protectable interest and the restraint goes no further than necessary to protect that interest.

Customer non-solicits

Permissible.

Employee non-solicits

Permissible.

South Korea

Restrictive covenants are generally enforceable in South Korea, provided they are reasonable and protect an employer's trade secrets.

Non-competes

Enforceable if reasonable and necessary to protect the employer's trade secrets.

Customer non-solicits

Enforceable if reasonable and necessary to protect the employer's trade secrets.

Employee non-solicits

Enforceable if reasonable and necessary to protect the employer's trade secrets.

Spain

Those aimed at protecting the employer's legitimate business interests can be enforced provided that:

  • The employee receives adequate consideration
  • The restraints do not exceed 2 years for qualified employees and 6 months for non-qualified employees

Non-competes

Permissible under the abovementioned rules.

Once agreed upon, the employer cannot unilaterally waive, and therefore must pay the agreed-upon compensation. This restriction is usually agreed upon with high-profile employees only.

Customer non-solicits

Permissible under the abovementioned rules. Extensive solicitation could also be subject to civil law claims under unfair competition rules.

Employee non-solicits

Permissible under the abovementioned rules. Extensive solicitation could also be subject to civil law claims under unfair competition rules.

Sweden

There are no specific statutory rules under Swedish law prohibiting post-contractual restraints. Instead, the rules are normally contained in collective bargaining agreements, which may allow post-contractual restraints under certain circumstances. However, such restraints may be deemed unreasonable and set aside or adjusted by a Swedish court. If the employee is provided with compensation (at least 60% of the employee's monthly salary) during the restricted period, the chances of the restrictions being enforceable are typically better.

Non-competes

Normally 9 months, but at most 18 months. The latter normally only applies in exceptional circumstances. In order for a non-competition clause to be valid, the employee must be entitled to compensation during the restricted period. The compensation does not need to exceed 60% of the employee's previous salary with the employer.

Customer non-solicits

Permissible, but can be adjusted by a court ruling.

Employee non-solicits

Permissible. Non-solicitation clauses should not, however, extend beyond the legitimate interest to equalize the competitive advantage gained by the employee through the knowledge of the former employer's employees.

Switzerland

Non-competes

Possible, provided the working relationship allows for employees to have knowledge of their employer's clientele or manufacturing or commercial secrets. Non-competition clauses based on knowledge of the client are, in principle, unacceptable in circumstances where the relationship between employees and clients is essentially a personal one, based on employees' abilities and their particular relationships with clients. The restraint has to be appropriately restricted with regard to place, time and scope so that it does not unfairly compromise the employee's future economic activity. Typically no more than 1 year, if based on the knowledge of the employer's clientele, and no more than 3 years, if based on knowledge of manufacturing and commercial secrets.

Customer non-solicits

Permissible (with similar restrictions to non-competes).

Employee non-solicits

Permissible (with similar restrictions to non-competes).

Taiwan

In order for an employer/employee non-competition agreement/provision to be valid and enforceable, the following requirements must be met:

  • There are special interests of the employer that deserve protection
  • The employee occupies a certain level of position in the company
  • The restrictions on the new employment, with respect to the employee, duration, geographical area and professional activities, should be reasonable
  • A competitive action by the employee would be a violation of trust and faithfulness to the employer
  • Employees need to be compensated for loss from the non-competition obligation, separate from salary received from employment
  • The amount of any penalty must be reasonable

Non-competes

Permissible for restraint periods of up to 24 months.

Customer non-solicits

Permissible for restraint periods of up to 24 months.

Employee non-solicits

Permissible, for restraint periods of no longer than 24 months.

Thailand

Those that protect the employer's legitimate business interests can be enforced to the extent that they are reasonable and fair to the parties.

Non-competes

Non-competition agreement is permissible to the extent that it is reasonable and fair to the parties. Generally, a restriction period of not more than 2 years, within a restricted area (such as Thailand) is acceptable.

Customer non-solicits

Non-solicitation agreement is permissible to the extent that it is reasonable and fair to the parties. Generally, a restriction period of not more than 2 years, within a restricted area (such as Thailand) is acceptable.

Employee non-solicits

Non-solicitation agreement is permissible to the extent that it is reasonable and fair to the parties. Generally, the restriction period of not more than 2 years, within a restricted area (such as Thailand) is acceptable.

Turkey

Written form is a condition for the validity of a non-compete agreement. Non-competes are valid only if the employee is employed in a position whereby he/she has the opportunity to acquire valuable knowledge or trade secrets.

Non-competes

Non-compete undertakings:

  • Must be limited to a certain period of time (ie, maximum two years)
  • Must be effective within a specified territory
  • Must be in relation to a specific business field

Limitation is not regulated under the law and must be determined according to the particular case. However, based on Court of Appeal decisions it is not possible to stipulate the non-compete territory as "all over the world" or "Turkey as a whole."

For example, "within the provinces in Turkey that the company operates" will be a valid territory for non-compete obligation.

Customer non-solicits

Permissible.

Employee non-solicits

Permissible.

Uganda

Considered to be in restraint of trade and void. However, those restraints that protect the employer's legitimate business interests can be enforced if reasonable. They need to be tailored for the specific business and the risks posed by the employee. Garden leave is common for senior employees.

Non-competes

Permissible in narrow, justifiable circumstances, if reasonable. Typically no longer than 6 months (maximum of 12 months), depending on the circumstances.

Customer non-solicits

Generally permissible. Usually 6-12 months. Not yet tested in this jurisdiction.

Employee non-solicits

Permissible. Usually 6-12 months.

Ukraine

Generally unenforceable. In practice, restrictive covenants can be included in separate (non-employment) agreements with  top management level employees.

Non-competes

Generally unenforceable.

Customer non-solicits

Generally unenforceable.

Employee non-solicits

Generally unenforceable.

United Arab Emirates

It is permissible to include restrictive covenants in the employment contract, provided that the employee is at least 21 years of age when entering into the restrictions, the employee has become acquainted with the employer's clients or the secrets of the business, and the covenants are limited in relation to their duration, geographic scope and the nature of the business to be protected.

Parties are permitted to include a liquidated damages clause in the employment contract, because it is not possible to obtain an injunction onshore in the UAE, although there are rules against "exorbitant" penalties being applied in employment contracts under the Civil Code. Starting from March 2017 there is a possibility to seek a ban on the employee's residence visa if they are in breach of a restrictive covenant which would prevent them from working in the territory of UAE.

Non-competes

Typically no longer than 6 to 12 months.

Customer non-solicits

Typically no longer than 6 to 12 months.

Employee non-solicits

Permissible.

United Kingdom

Considered to be in restraint of trade and void. However, those that protect the employer's legitimate business interests can be enforced if reasonable. Need to be tailored for the specific business and the risks posed by the employee. Garden leave is common for senior employees.

Non-competes

Permissible in narrow, justifiable circumstances. Typically no longer than 3-6 (maximum of 12) months, depending on the circumstances.

Customer non-solicits

Permissible in specific circumstances. Typically no longer than 3-6 (maximum of 12) months, depending on the circumstances.

Employee non-solicits

Permissible. Length of restriction will depend on the circumstances.

United States

Permissible restraints are generally governed by state law (statutory and common law) and vary significantly from state to state. In most states, post-employment restrictions that are reasonably necessary to protect employer's legitimate business interests will be enforced.

Non-competes

Enforcement of non-competes varies from state to state. Where they are permitted, restrictions lasting from 6 months to 1 year are generally deemed reasonable, and restrictions lasting more than 2 years are generally considered unreasonable (except in connection with the sale of a business). Some states (eg, California, Colorado, North Dakota, and Oklahoma) prohibit or otherwise strictly limit non-competes in the employment context by statute, except in connection with the sale of a business.

Customer non-solicits

Enforcement of customer non-solicits varies from state to state. They are generally permissible if the employee was involved with a customer and the employer aided in developing the relationship or if the employee obtained confidential information from or about the customer. Customer non-solicits are treated similarly to non-competes in most states, including that they are generally prohibited in California.

Employee non-solicits

Enforcement of employee non-solicits varies from state to state. They are generally permissible.

Venezuela

Non-competes

As long as it has been agreed in writing at the beginning of the employment relationship, is based on justifiable reasons, and remuneration to the employee is set forth (in an amount agreed between the parties), the employer may impose a post-termination non-compete of up to 6 months after the termination of the employment relationship.

Customer non-solicits

Permissible in specific circumstances (see non-competes above).

Employee non-solicits

Permissible in specific circumstances (see non-competes above).

Vietnam

Non-competes

There is no regulation of non-compete clauses in the Labor Code 2012. Article 23 stipulates that when an employee performs work which is directly related to business or technological secrets, the employer has a right to the written agreement of the employee to terms of confidentiality for business secrets and technology, and to penalties should the employee breach such an agreement.

As there is no regulation or express prohibition of non-compete clauses, non-compete clauses are permissible.

Customer non-solicits

Not regulated. Uncertain in terms of enforceability.

Employee non-solicits

Not regulated. Uncertain in terms of enforceability.