non-competition agreements

[Fabio J. Guzman]

Every employee is forbidden from disclosing any confidential information about the business in which he or she works (Art. 44, Paragraph 7 of the Labor Code). This obligation not to divulge trade secrets survives the employment contract. Therefore, a non-compete agreement preventing an employee from using inside information for the benefit of another employer is indeed legal. It should include a stiff liquidated damages clause (?cl?usula penal?) to facilitate enforcement.

 

[Chris]

Fabio, does this count for sub-contractors? Someone working for you doing a specific task that you have contracted them for? And they have specifically agreed not to divulge company information that they are privileged to see?

 

[HOWMAR]

Every employee is forbidden from disclosing any confidential information about the business in which he or she works (Art. 44, Paragraph 7 of the Labor Code). This obligation not to divulge trade secrets survives the employment contract. Therefore, a non-compete agreement preventing an employee from using inside information for the benefit of another employer is indeed legal. It should include a stiff liquidated damages clause (‘cláusula penal”) to facilitate enforcement.

But, I don't believe that was the question posed. The OP was not concerned with an employee utilizing confidential information, but was concerned with his ability to go into a competing business. So as I read your answer, if no confidential information is utilized, a competition clause cannot be enforced? For example. if you taught an employee something generic such as how to be a welder, can he be prevented from opening a welding business?

 

[Fabio J. Guzman]

Chris, in the case of sub-contractors, you would have to specify the prohibition in writing.

Howmar, I believe a non-compete would be legal if: (a) the prohibition to work is limited with regards to location (a city for example, but not the whole country ) and time (a year but not 10 years or forever); (b) if there is a sufficient strong reason for the prohibition (knowledge of client base by former employee is very important in the business). The issue, however, is controversial and as far as I know has not been definitely decided in the courts.