Employee's Non-Competition Agreement
Employees may be asked not to establish a direct or indirect workplace in the same line of business for a certain period of time after they leave their jobs due to the information they obtain at the workplace and the secrets they have at the workplace, or to make a commitment to not work in or joint with businesses operating in the same field.
As it is known, the employee may be aware of the commercial and operational secrets of the company such as various documents, projects, computer programs, passwords, customer portfolio, price policy as a necessity of his / her business and the loss of the employer can be lost or lost by the employer in the hands of other enterprises operating in the same field. The employer who wants to avoid these losses will be able to demand some restrictions related to his / her new workplaces if he leaves his / her job and will be able to bind this in a written commitment.
The principles and conditions of this commitment, called the Employee’s Non-Competition Agreement, are regulated in articles 444-447 of the Code of Obligations No. 6098, and it is aimed to establish a balance that is highly sensitive on the basis of equality between the employer’s commercial interests and the worker’s freedom of work.
Conditions of Non-Competition
Article 444 of the aforementioned law contains the provision that ‘’The employee having the capacity to act may undertake to refrain from competing against him in any way after the termination of the contract, in particular by opening a rival business in his own capacity, working in another competing enterprise or otherwise, attempting to engage in a different kind of interest with the competitor.’’
According to this definition, the following conditions must be fulfilled in order for the contract to be valid.
- The contractor must have capacity to act and should not have any legal limitations.
- The contract must be in writing; thus, the employee will be fully aware of the commitments he has made.
- Since the purpose of the contract is to prevent the use of business secrets from competitors, first of all, the workers who are prohibited from competition should be able to reach these secrets.
- In addition, the use of this information will cause the employer to suffer a significant loss.
Restrictions on Non-Competition Agreements
According to Article 445 of hereby Code; ‘’Non-Competition may not impose improper restrictions in terms of location, time and type of work, which would jeopardize the economic future of the worker unfairly and its duration shall not exceed two years except for special circumstances and circumstances.’’
• Location restriction:
The place and geographical area to be valid of the prohibition of competition shall be clearly stated. As a general rule, space limitation cannot go beyond the field of activity of the previous employer.
• Time limitation:
Except for special cases, these contracts may not exceed 2 years. Within 2 years of leaving the work, the prohibition on competition of the worker will expire.
• Limitation in terms of the type of business:
Limitation cannot exceed the employer’s field of activity.
• Limitation of the judge’s authority:
The judge may limit the prohibition of excessive competition in terms of its scope or duration, by freely evaluating all conditions and conditions and by taking fair-minded action into account of the employer.
Non-compliance with the Non-Competition
The worker who acts against the non-competition is obliged to compensate all damages suffered by the employer as a result.
If the breach of the ban is not subject to a penal clause and there is no other provision in the contract, the employee may be able to pay the fine and avoid the debt arising from the prohibition of competition, but still have to cover the loss exceeding that amount. The employer may require the termination of the unlawful conduct provided that he has clearly stated that he has reserved this right except for the penalty condition and the payment of additional damages.
Termination of the Competition Prohibition
The prohibition on competition will end in the following cases.
- End of period: As mentioned above, contracts are limited for a period of time, except in special cases, this period may not exceed two years.
- No Benefit: If the employer has no real benefit in maintaining the prohibition of competition, the contract must be terminated. The prohibition on competition will be terminated when the employment contract is terminated by the employer for a reason that can be attributed to the employer or without a justifiable reason.
Non-Competition Agreements Format
Although not specified in the Code as a formal, it is important for the validity of the contract that the following headings contain as minimum:
- Name of Employer (or Company Name)
- Purpose and Subject of The Contract
- Work Done
- Obligation of The Worker
- Employer’s Rights
- Authorized Court
- Effective Date
- Date of Contract