Employment & Labour

EMPLOYEE’S NON-COMPETE OBLIGATION AND VALIDITY CONDITIONS OF THE NON-COMPETE AGREEMENT

The employee has a fidelity obligation towards the employer within the scope of the employment relationship and this obligation constitutes one of the most important obligations of the employee. The Employee’s non-compete obligation is a manifestation of the fidelity obligation towards the employer.

Non-compete obligation may arise during the continuation of the employment contract or after the termination of the employment contract. Non-compete obligation during the continuation of the employment contract is closely related to the employee’s fidelity obligation and derives its source from the employee’s fidelity obligation towards the employer. 

If the employee and employer agree that the non-compete obligation of the employee to continue after the termination of the employment contract, they include a clause in the employment contract on this issue or make a separate non-compete agreement. The prohibition of competition is regulated in Article 444 of the Code of Obligations No. 6098 and accordingly, the employee undertake in writing that he/she cannot compete with the employer in any way after the termination of the employment contract, open a competitor business on his/her own account, work in another competitor business, or enter into any types of interest relationship with any competitor companies. The non-compete agreement imposes certain limitations on the economic interests and freedom of the employee, thus, there are some validity conditions. Whereas;

It is not possible for the non-competition to contain inappropriate restrictions in terms of place, time and type of work, in a way that would endanger the economic future of the employee unfairly, and its duration cannot exceed two years, except for special circumstances and conditions pursuant to article 445 of the Turkish Code of Obligations No. 6098. The aforementioned conditions in the non-compete agreement are mandatory and in the absence of one of these conditions, it is not possible to talk about a valid non-compete agreement. The burden of proving the existence of the necessary conditions for a valid non-compete agreement rests with the employer. Accordingly, in the non-compete agreement, the place where the prohibition will be valid must be specified with a time limit and strictly limited in terms of subject.

Limitation in terms of subject: It is interpreted as limited to the employer’s field of activity and the professional knowledge learned by the employer. The restricted field of activity must be appropriate and in moderation to the field of activity of the employer at the date of termination of the employment relationship.

Limitation in terms of time: It cannot exceed two years under special circumstances and conditions. At this point, it is important to establish a balance between the economic benefits of the worker and the interests of the employer regarding professional secrets.

Limitation in terms of location: The prohibited area must be in moderatian and conform with the geographical area in which the employer operates, and must be related to the employer’s customer environment.

It should be noted that restrictions on noncompetition are closely related to variable factors such as the workers’ qualifications, their knowledge of trade secrets, and how extent and how scope the employer specializes in its field of activity.

The employee, who violates the prohibition of competition, is obliged to compensate for all the losses incurred against the employer as a result of this act in accordance with Article 446 of the Code of Obligations. It is possible that an act contrary to the prohibition may also be subject to a penalty clause in the agreement. If there is no contrary provision in the agreement, the employee can get rid of his debt related to the prohibition of competition by paying the penal clause; however, the employee is also obliged to compensate the amount exceeding the penal requirement.

 

Türküm Türkmen
Attorney At Law

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