Competition provision. Provisions in employment contracts that forbid employees to enter into an employment contract with the competitors of employees by competitors of the employer are non- binding if such an engagement is wider in scope than would be necessary in order to prevent competition or to limit in an unfair manner the employee’s freedom to employment. To determine wheter this is the case, each case must be evaluated on a case-by-case basis, taking into consideration all circumstances. Competition provisions may not be worded too generally. When assessing how far-reaching competition provisions in an employment contract may be, particularly as regards their scope of application and the time limits involved, the following factors must be considered:
a. The type of work performed by the emplyee involved, e.g. is the employee a key employee, in direct contact with the customers or is there significant confidentiality attached to the job? In addition, what knowledge or information the employee might possess with regard to the activities of the company or its customers.
b. How quickly the employee’s knowledge becomes outdated and whether a normal balance is kept among the employees.
c. The type of operations involved and the identity of the competitors in the market where the company operates and which the employee’s know-how covers.
d. That an employee’s freedom of employment is not restricted in an unfair manner.
e. That the non-competition clause is delineated and concise with regard to the purpose of protecting certain competition interests.
f. The remuneration of the employee will also have an effect, i.e. for instance, what his wages are. The competition provisions of employment contracts do not apply if the employee is dismissed from his job without sufficient cause.
Competition provision. For a period of three (3) years following the Closing Date:
Competition provision. Provisions in employment contracts that forbid employees to enter into an employment contract with competitors of the employer are non-binding if such an engagement is wider in scope than would be necessary in order to prevent competition or unfairly limit the employees freedom to employment. To determine whether this is the case, each case must be evaluated on a case-by-case basis, taking into consideration all circumstances. Competition provisions, therefore may not be worded too generally. When assessing the permissible scope of a non-competition clause in a contract of employment particularly as regards scope end time limits, the following factors must be considered:
a. The type of work performed by the employee involved, e.g. is the employee a key employee, in direct contact with the customers or has high level of confidentiality. In addition, what knowledge or information the employee might possess with regard to the activities of the company or its customers.
b. How quickly the employees knowledge becomes outdated and whether a normal balance is kept among the employees.
c. The type of operations involved and the identity of the competitors in the market where the company operates and which the employees know-how covers.
d. That an employees freedom of employment is not restricted in an unfair manner.
e. The non-competition clause must be defined and concise with regard to the purpose of protecting certain competition interests.
f. The remuneration of the employee will also have an effect, i.e. for instance, what his wages are. The competition provisions of employment contracts do not apply if the employee is dismissed from his job without sufficient cause.
Competition provision. Provisions in employment contracts that prohibit employees from working for their employers’ competitors are non-binding if such provisions are broader than is necessary to prevent competition or if they restrict the employees’ freedom of employment in an unfair manner. In either case, such provisions must be evaluated on a case-by-case basis with consideration to all relevant factors. Competition provisions should therefore not be worded too generally. In assessing the breadth of an employment contract’s competition provision, particularly in terms of the scope of application and time limits, the following factors must be taken into consideration:
a. The type of work the employee in question performed, e.g. whether he/she is a key employee, is in direct contact with customers or bears a significant confidentiality obligation. Any knowledge or information the employee may have regarding the company’s operations or its customers must also be considered.
b. How fast the employee’s knowledge becomes obsolete and whether normal equality among employees is observed.
c. The type of operation in question and the competitors in the market in which the company operates, and the extent of the employee’s knowledge.
d. That an employee's freedom of employment is not restricted in an unfair manner.
e. That the competition provision is specific and concise with a view to protecting certain competitive interests.
f. The remuneration an employee receives, e.g. how high his/her wages are, also come into play. Competition provisions of an employment contract do not apply if an employee resigns without providing sufficient reason.
