The non-competition clause is an instrument of great importance in a Labor Agreement, because it helps to protect the commercial interests of a company, its intellectual property and its professional secrets. It is an effective tool to ensure a balance in commercial competition. This is why it is necessary not only to manage the concept of it, but also to have an adequate legal advice for its correct drafting.

In this case, we will delve into the non-competition clause in a labor agreement. This clause in this type of contract establishes the prohibition for the employee to perform functions that may be considered “competition” or “disloyal” conduct towards the employer, during the development of the labor relationship and/or after its termination.

This issue is not explicitly regulated in our Labor Code, but we can find in article 71 an interpretation that guides us with the definition; where it is established that one of the obligations of the workers is; “…to rigorously keep the technical, commercial or manufacturing secrets of the products to whose elaboration they directly or indirectly participate, or of which they have knowledge by reason of the job they execute; as well as of the reserved administrative matters, whose disclosure may cause damages to the employer, and…”

This is an obligation during the employment relationship, and it can be used to justify the non-competition while an employee works in a company, but it can be extended until after the termination of the relationship as long as it is proportional and reasonable for the employee. It will always be completely valid to agree on the employee’s commitment not to work after the termination of his contract or during it, in activities similar to those he has been performing. For example, if an employee has developed a new product while working for our company, the non-competition clause can help us to ensure that he/she does not use it to compete against us.

As we mentioned, there are no regulations in this matter, but we must delve into the pronouncements of the Second Chamber in order to know and understand what legal parameters we must follow so that the clause that we are introducing in a contract is not contrary to what is allowed in our country, and furthermore, that it not only benefits the employer, but also the employee. For this, there are a set of rules that must be followed, and, in order to know and apply them, it is important that we have a lawyer specialized in the matter, who assures us that the wording of such clause is legal, and that it will not generate any type of nullity over time.

Something very important is that we can not only add it in an employment contract, but also, depending on the circumstances that have changed between the employer and the employee, in an addendum, and it will be valid as long as both parties agree with the agreed conditions. This can be justified by the employer’s power to unilaterally modify conditions of the agreement as long as it is not modifying essential elements to the detriment of the employee. Therefore, although it is true that there must be an agreement between the parties for non-confidentiality, there is no prohibition to introduce such clause in an addendum.

If you are an employer and wish to make a Labor Agreement or an addendum to it, where a non-competition clause is included, according to the legal parameters, in order to protect your commercial interests and the professional secrets of your company; at ERP Lawyers we have a team of lawyers who are experts in the matter. Do not hesitate to contact us at info@erplawyers.com