26 February, 2019

What does non-compete clause mean for employers?

The Employment Relationships Act (hereinafter: ZDR-1) regulates two types of competition bans; a prohibition on competition and a non-compete clause. A prohibition on competition is a legal prohibition of competitive activity and obliges the employee for the entire duration of the employment relationship, while the competing clause relates to the time after the termination of the employment relationship and is only applicable if the employee and the employer agree to it in a contract of employment.

It is advisable that an employer who employs employees who, in their work or in connection with work, acquire technical, manufacturing or business knowledge and business associations, include a non-compete clause in the contract of employment. In this way, he protects his business interests and ensures protection against unfair competition from an employee who leaves the employment relationship and could use his knowledge and relationships for competitive purposes.

If, as an employer, you want to successfully protect your interests and ensure that your employees will not use your knowledge or perform competitive activities after the termination of their employment, make sure that the competitive clause you have included in the contract of employment is in accordance with legal provisions.

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