The competition clause as an institution exists both in the domestic and in the legislation of several countries. This clause in our legislation is regulated in the Labor Law. According to this law, it is possible to insert a competition clause in the employment contracts of workers as a contractual ban on competitive action. According to the provisions of the law, if the employee acquires technical, production or business knowledge and business connections during his work or in connection with the work, in the employment contract, the employee and the employer may agree on a ban on performing competitive activities after the termination of the work relation (competition clause).
The duration of the competition clause can be agreed for a maximum period of two years after the termination of the employment contract, and only in cases where the employee’s employment contract is terminated by his own will or fault.
What is specific about a non-compete clause is that it must be expressed in writing, otherwise it is considered not to have been agreed upon at all.
Considering the fact that for the duration of this clause the employee is prevented from earning due to compliance with the competition clause, the law provides a legal obligation for the employer to pay appropriate compensation. Namely, according to the provisions of the law, if compliance with the competition clause prevents the employee from earning adequate income, the employer is obliged to pay monetary compensation to the employee for the entire period of compliance with the prohibition.
The monetary compensation for compliance with the competitive prohibition must be determined by the employment contract and monthly can be at least half of the employee’s average monthly salary in the last three months before the termination of the employment contract.
Unlike our legislation, in the United States there is a change in the way the non-competition clause is negotiated. Тhis month the New York State Senate and then Assembly passed legislation banning provisions in employment contracts that restrict where the employee may work after their employment ends. Under the proposed law, a non-compete agreement is defined as “any agreement, or clause contained in any agreement, between an employer and a covered individual that prohibits or restricts such covered individual from obtaining employment, after the conclusion of employment with the employer included as a party to the agreement.” The proposed legislation would prohibit employers from seeking, requiring, demanding, or accepting non-compete agreements with any “covered individual” regardless of their position and/or salary. The bill would not prohibit employment contracts that restrict “covered individuals” from disclosing trade secrets or confidential information, or from soliciting the employer’s clients, so long as the agreement “does not otherwise restrict competition in violation of this section.”