Author: Clara Arenas Lora.
Becoming a benchmark company in the industry requires effort and sacrifice. However, talent turnover and brain drain can sometimes lead to leaks that can be detrimental to us as an organization. For this reason, the non-competition pact is essential to preserve the secret of this success and thus prevent other companies from copying our method and tarnishing our business growth.
The non-competition pact assures us that our company’s work method will not be used for the benefit of others in the same sector, making it essential for certain entities to have their employees sign it. The exclusivity of the workers while they develop their work activity with the company and their discretion when their contract ends and they leave, are aspects that must be expressed in writing, having to fulfill certain requirements.
Firstly, when signing a non-competition agreement, the company must demonstrate that its activity has a commercial interest, which may be damaged if the employee discloses certain information of a sensitive nature. For this, the company has to justify and demonstrate that this interest really exists and all the damage that could be caused by an employee who breaches the non-competition agreement.
The employee may provide his services in another competing company before the end of the non-competition agreement, as long as he is hired for an activity that is not related to the work he performs in his other organization.
Secondly, since the employee undertakes not to work for a certain period of time in a similar position for other competing companies in the sector, his company must compensate him financially. And this without losing sight of the fact that this employee is being forced to reject possible job offers for the entire duration of the non-competition agreement. Thus, it becomes a mechanism of peace of mind for the company with respect to the confidentiality of its production processes and that the employee, when he leaves the company, achieves economic stability, the amount of which is proportional to the interests of both the employer and the employee.
The non-competition agreement may also have a maximum duration of two years for persons occupying a technical position, and six months for other employees, and must always be formalized in writing so that it is fully valid and signed either before signing the contract, or at the time of signing the contract, or during the term of the employment relationship or at the end of the contract.
Notwithstanding the above, it may happen that the employee breaches the non-competition agreement, which could lead the employer to denounce the employee and claim damages.
Finally, the company should be aware that the non-competition agreement will be annulled if the aforementioned requirements are not met. That is to say, if there is no adequate financial compensation by way of indemnification for the employee or if its amount is insufficient, if the employer does not demonstrate a real commercial interest or if the time limit indicated for each type of employee is exceeded.
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