Confidentiality and Restrictive Covenants in The EU - A Quick Guide

GLOBAL COUNSEL MARCH 2003 www.practicallaw.
com/global
An ex-employee, and on occasion a
current employee, can be a dangerous
competitor. At risk may be a
companys trade secrets, confidential
information, customers, clients and
suppliers and even its employees.
However, public and personal interest
dictates that workers are not
constrained from carrying out their
trade or profession freely. In addition,
competitive activity between
businesses should be encouraged.
Countries within the EU have found
different ways of reconciling these
conflicting principles. In some
countries, most notably Italy and
Germany, the position is governed
by legislation and highly codified. In
others, particularly the UK
(England and Wales), court
decisions provide clues, but not
definitive guidance.
This QuickGuide overviews the rules
governing confidentiality and
restrictive covenants in France,
Germany, Italy, The Netherlands and
the UK (England and Wales). In
particular, the following heads of
protection are covered:
Confidential information.
Non-competition.
Non-solicitation of customers.
Non-solicitation of employers.
Non-interference with suppliers.
43
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Any employer will want to ensure that both current and former employees
do not misuse information crucial to its business interests. In this
QuickGuide, experts from BAKER & McKENZIE consider the degree to
which legislation and settled legal principles in France, Germany, Italy, The
Netherlands and the UK (England and Wales) can assist.
Confidentiality and
restrictive covenants in
the EU: QuickGuide
43 43
www.practicallaw.com/A28472
GLOBAL COUNSEL MARCH 2003 www.practicallaw.com/global
EMPLOYMENT: RESTRICTIVE COVENANTS
45 GLOBAL COUNSEL MARCH 2003 www.practicallaw.com/global
44
CONFIDENTIAL INFORMATION
Is there automatic protection in your
jurisdiction against former employ-
ees using confidential information?
If so, what?
Are express confidentiality clauses
commonly used?
What remedies are available for
breach of confidentiality obligations
by former employees?
Yes, there is automatic protection,
but express provision is advisable.
Proof is generally difficult to obtain.
Yes.
Compensation for breach of the
good faith obligation under the Civil
Code; and/or
Criminal sanctions under the
Labour Code in very specific in-
stances, for example, where a man-
ufacturing secret is disclosed.
Yes, provided that it falls within the
legitimate interest of the employer
and does not prevent the employee
from working in his particular field.
Yes. However, they cannot be used
to circumvent regulations on post-
contractual non-compete
covenants. Thus, although the em-
ployee can be prevented from using
business information for the benefit
of third parties, he cannot be en-
tirely prevented from using the in-
formation on his own account to de-
velop his own business. Many
confidentiality clauses commonly
used are too broad and therefore in-
valid and unenforceable.
Contractual penalty.
Injunction.
Damages.
During employment: formal warn-
ing and termination.
Yes, against the use by former em-
ployees of any confidential informa-
tion relating to the employer's or-
ganisation and method of
production.
During employment, employees are
also bound by a general duty of loy-
alty towards their employer which
prohibits any use of confidential in-
formation to initiate or promote ac-
tivity in competition with that of the
employer.
Employees are bound to keep any
trade secrets confidential for as long
as they remain such, that is, as long
as the employer has a reasonable in-
terest in them not being used by
third parties or otherwise divulged
to the public.
Post employment, clauses which
seek to limit the employee's free-
dom to divulge information concern-
ing the employer's business, may be
entered into. However, these are not
generally very common.
Increasingly, the employees of
multinational companies (in com-
mon with other employees) are re-
quired to sign specific non- compe-
tition and confidentiality
agreements, which may be useful to
enlarge the scope and strengthen
the enforceability of the employee's
obligations. These must comply
with statutory requirements and be
very carefully drafted.
Damages, recoverable either from
the employee or from a company
which knowingly benefits from the
information provided as a conse-
quence of the breach.
Recovery of damages by way of a
liquidated damages clause (al-
though such clauses can be totally
or partially disregarded by the
courts if they are deemed to be in-
equitable under the circumstances).
No, but the employer may take legal
action on the basis of a breach of
contract, if confidentiality was
agreed upon as a post-contractual
obligation.
Alternatively, the employer can
claim damages in respect of a
wrongful or unlawful act under the
Dutch Civil Code. A former em-
ployee commits a wrongful or un-
lawful act if he illicitly discloses
confidential information, defined as
the disclosure of confidential infor-
mation by a former employee, who
can reasonably be expected to know
that this will cause damage to the
former employer.
Most employment contracts include
express confidentiality clauses, of-
ten accompanied by a penalty
clause.
Damages (although these can be
difficult to prove); or
Contractual penalty, where a
penalty clause has been agreed.
Ex-employees are under an auto-
matic implied duty not to use or dis-
close:
Trade secrets; or
Information which is so highly
confidential that it amounts to a
trade secret.
The use of confidential information
which becomes part of the employ-
ee's own skill and knowledge cannot
be restrained after termination of
employment.
Given the uncertainties surrounding
what constitutes trade secrets and
confidential information, employers
often require key employees to enter
into express confidentiality clauses.
Such clauses are recommended.
Damages.
Interim injunctions (restraining
the use of confidential information,
requiring delivery up/destruction
(under supervision), sometimes
combined with an order for search
and seizure).
A "spring board" injunction, so-
called because it prevents an em-
ployee from making a "head start"
through the use of confidential infor-
mation gained during employment.
Account of profits.
France Germany Italy The Netherlands UK (England and Wales)
46
Are any other considerations rele-
vant?
NON-COMPETITION
Are express non-competition
clauses commonly used?
Do such restrictions require pay-
ment on entering into them or
post-employment?
All employment related documenta-
tion must be drafted in French, in-
cluding any post-termination re-
strictions, in order to be binding and
enforceable on the employee.
In the past, in certain industries, ex-
press non-competition clauses were
often included as a matter of course
in standard employment contracts
for executives (cadres). However,
the French Supreme Court recently
held that, in order to be valid, a non-
compete clause must provide for fi-
nancial compensation to be paid to
the employee. Employers are there-
fore now more reluctant to include
such clauses in employment con-
tracts.
Yes, in the Supreme Court's recent
ruling (see above), it was held that
the employer must pay financial
compensation to the employee.
Litigation in relation to breach of
confidentiality obligations is very
rare in Germany. A great deal of evi-
dence is required to prove the
breach of such obligations, and
such litigation tends to be very
costly.
No. Because of the costs related to
such protection only key employees
should be restricted by such a
clause.
Yes. They are only valid if the em-
ployee receives compensation of at
least 50% of his final remuneration.
In addition, a breach of such a
covenant is difficult to prove and
easy for the employee to circum-
vent.
Compensation is payable pro-rata on
a monthly basis for the full duration
of the restriction. To some extent,
income received from other employ-
ment can be set off against this.
It is not settled whether non-com-
pete restrictions for managing direc-
tors require payment of the same
level of compensation, but it is
safest to assume that this is the
case.
Courts have held that an employer who
knowingly solicits employees to breach
their confidentiality obligations in or-
der to obtain a competitor's confiden-
tial information, is guilty of unfair com-
petition and is liable to pay damages
arising from the misuse of such infor-
mation.
These are common post-employment in
specific business fields, for example,
in technically complex manufacturing
or commercial companies, and in re-
spect of highly skilled staff or those
hired at senior levels, such as man-
agers (dirigenti).
During employment there is no strict
need to execute a non-compete agree-
ment as an employee is prohibited from
competing while an employment agree-
ment is in force. They can, however, be
included in an employment contract or
entered into during employment, partic-
ularly to tailor the scope of the non-com-
pete prohibition to suit the needs of the
parties.
Yes, but there are no guidelines for de-
termining the appropriate amount. The
courts have indicated that the amount
cannot be a nominal sum but must be
fair and proportionate to the loss of the
employee's employment opportunities.
From a practical point of view, com-
pensation agreed upon should relate to
the limitations imposed on the em-
ployee: the broader the limitations in
terms of geographical area and type of
activities, the higher the compensa-
tion. Compensation may be paid during
employment or on termination, as
agreed by the parties. It may comprise
benefits other than financial.
In any event, courts have held that not
even very generous compensation justi-
fies restrictions which totally preclude
the employee from performing any form
of work during the term of the clause.
In light of the difficulties in proving
the damage caused to the employer
by a breach of confidentiality oblig-
ations, it is generally advisable to in-
clude a liquidated damages clause
which will be triggered if this obliga-
tion is breached. This clause may
well act as a deterrent to any em-
ployee who is considering breaching
such an obligation.
Yes, although mainly for employees
who hold senior positions in a com-
pany or for employees who hold po-
sitions in which they can obtain in-
formation and experience that could
cause damage if they join a com-
petitor.
No, but if the restriction is held to
significantly prevent the employee
from taking alternative employment,
a court can order the employer to
pay the employee compensation for
the duration of the restriction.
A legislative proposal pending be-
fore the Dutch Parliament will intro-
duce new regulations regarding non-
compete restrictions. These will
require that the employer pay the
employee compensation. This will
need to be provided for in the em-
ployment contract.
Most available remedies are discretionary
and a number of factors are relevant, in-
cluding whether damages would be an ad-
equate remedy. If this is the case, an in-
junction or account of profits will not be
granted. A claimant must also act without
delay when seeking injunctive relief or an
account.
There can be a very high cost associated
with an application for an interim injunc-
tion. A cross-undertaking in damages must
be given, meaning that if at trial the court
determines that the injunction was wrongly
granted, the claimant will compensate the
defendant for losses suffered during the pe-
riod of restraint.
These are not uncommon. However, strict
rules govern their enforceability. The start-
ing point is that they are a restraint of
trade and therefore in principle void. If
they are to be enforceable, they must be
drafted so that they go no further than is
reasonably necessary to protect the em-
ployer's legitimate business. In practice,
the scope of the restriction should be tai-
lored to reflect the threat the employee
poses.
They are only valid if "consideration" has
been given by the employer. This can be
money but also may be something else of
value, such as promotion. Such clauses
are usually entered into at the start of em-
ployment or on promotion, thus considera-
tion consists of the offer of employment or
promotion, as applicable. Employers who
ask their employees to enter into such
clauses shortly after employment has
commenced may face difficulties enforc-
ing them unless they can point to specific
consideration.
On termination, if an employer requires an
employee to enter into new post-termina-
tion restrictions, then this may form part
of a compromise agreement under which
the employee agrees to waive his rights to
bring a claim against the employer in rela-
tion to the termination of employment, in
return for a compensation payment and
other terms. It is sensible to apportion
part of this compensation payment as con-
sideration for entering into new post-ter-
mination restrictions.
48
Do such restrictions need to be lim-
ited in geographical scope?
ited in time?
What is the effect of referring to
specific competitor companies for
whom employees are prohibited
from working for for the duration of
this restriction?
Do any other limitations have to be
imposed?
breach of such restrictions?
Yes. In order to avoid infringement
of the employee's freedom to work,
the limitation should be tailored to
the circumstances of each case and,
generally, should be limited to the
area within which the employee
worked for the employer.
Yes. This type of restriction should
normally not exceed a two year limit,
but most non-compete restrictions
are limited to one year.
The effect will be to limit the scope
of the clause to these specific com-
panies. Although the former em-
ployer cannot prevent an employee
from working in general, a clause re-
ferring to specific competitor com-
panies would probably be more
readily enforceable (but see below).
The clause must be proportionate to
the legitimate interests of the em-
ployer, and must not prevent the
employee from finding new employ-
ment.
Suspension of payment of com-
pensation to the employee.
Enforcement of any liquidated
damages clause.
Payment of damages by the em-
ployee or his new employer (as the
case may be).
Dismissal by the new employer of
the breaching employee and pay-
ment of damages by the new em-
ployer to the former employer - if ev-
idence can be produced showing
that the new employer was aware of
the non-compete clause.
Yes. This should be in line with the
territory the employee worked in, or
was responsible for, and where the
company does business that is related
to the work and knowledge of the em-
ployee.
Yes. Generally a period of up to two
years is an acceptable maximum
length for such covenants, but this
will depend on the circumstances and
the individual employee.
The purpose of the clause must be to
protect the employer's business, and
not to cause harm to specific competi-
tors. In addition, an employee cannot in
any case be prevented from working for
all parts of a competing company, but
only from positions related to the posi-
tion he previously held. An employee
can, however, be precluded from work-
ing for a company associated with a
competing company.
It is also prudent to define the prohib-
ited activities as precisely as possible.
Contractual penalty.
Injunction.
Damages.
Yes. The legislation is silent on what
is a reasonable geographical area,
and there are no express guidelines
which help to determine what might
be acceptable and enforceable. In
the absence of clear legislative
guidance, courts have at times ex-
pressed conflicting opinions.
Yes, up to five years for employees
classed as managers (dirigenti) and
up to three years in all other cases.
This can assist enforceability, if
carefully thought out: much de-
pends on the object or purpose of
the limitation.
Opinions differ as to whether a
covenant must be limited to the
same activity and/or duties per-
formed by the employee during his
employment or might extend to
other aspects broadly related to the
employer's business activity. This
latter opinion seems to prevail.
Preliminary injunction for spe-
cific performance ordering the em-
ployee to comply with his obliga-
tions (although this remedy has on
occasion been questioned by the
courts); or
Termination of the non-compete
agreement and the repayment of
any consideration granted to the
employee;
In any event, damages;
Where specified, advance recov-
ery of liquidated damages.
No, but a court can find a non-com-
pete restriction either wholly or par-
tially invalid because an employee is
unfairly prejudiced by the clause.
Part nullification is often performed
by limiting the geographical scope of
the non-competition. For this reason,
including a reasonable geographical
limit at the outset is advisable.
The proposed new regulations re-
quire that the geographical scope of
the restriction be described in pre-
cise terms.
Such restrictions need not be lim-
ited in duration. However, a court
can find that an employee is un-
fairly prejudiced by the duration of
the clause. The court will often
limit its duration, so it is advisable
to keep the length as short as is
strictly necessary to protect the in-
terests of the company. The usual
acceptable limit is 12 months.
Under the proposed new regula-
tions, any restrictions must last for
a maximum of one year after the
termination of employment.
This aids the enforceability of the
non-compete clause.
It is also prudent to define the pro-
hibited activities as precisely as
possible.
Preliminary injunction ordering
the employee to comply with the
obligations.
Damages.
Contractual penalty. In light of
the difficulties of proving the dam-
age caused, it is advisable to in-
clude a liquidated damages clause
in the employment contract.
Geographic area and duration are
closely related (see below). The shorter
the duration, the wider the potential
geographical area which may be ac-
ceptable. Whether a geographical re-
straint is permissible depends on the
scope of the employee's duties; a
worldwide restraint even for a very lim-
ited period will be unenforceable if the
employee only operates in the UK.
Yes, although it is impossible to pro-
vide general guidance on duration:
everything depends on the particular
circumstances. As a rule of thumb, the
shorter the clause, the better, and the
maximum length should be no more
than six months. If the duration of a
non-compete clause is held to be too
long, it will be completely void.
Where employees have particularly long
notice periods, that is, six to 12 months,
any time spent on garden leave should
be deducted from the duration of their
post-termination restrictions and the
clauses drafted to reflect this.
This may enhance the chances of the
clause being enforceable.
Yes, in the sense that the clause must
be limited to competitive activities and
limited to the specific business per-
formed by the employee during his em-
ployment.
Damages.
Interim injunction. This may be
combined with an application for a
search order where the employer sus-
pects that the employee is likely to try
and destroy evidence of the breach.
If an employer's breach of contract is
sufficiently serious, the employee may
argue that he is entitled to treat his em-
ployment as having been terminated by
the employer's breach, and that conse-
quently, he is no longer bound post-ter-
mination.
50
Are there any other relevant
considerations?
NON-SOLICITATION OF CUSTOMERS
Are express non-solicitation of cus-
tomer restrictions post-employment
commonly used?
Do such restrictions require payment
on entering into them, or post-employ-
ment?
Do such restrictions need to be limited
in geographical scope?
in time?
to certain types of customers?
If a non-compete restriction is con-
sidered to be too broad, a court may
decide to reduce the scope of the re-
striction to a level which it considers
to be more reasonable, or it may de-
cide that the entire clause is void.
Generally, non-compete clauses
cover the non-solicitation of cus-
tomers, and thus the same regula-
tions will apply (see Non-competi-
tion).
See Non-competition, although in
theory it could, in certain circum-
stances, be possible to have such a
restriction without payment if the
clause is not considered to be a non-
compete clause.
Such clauses should be limited in
scope - but the limitation can relate
to the company's activities rather
than geographical scope.
Yes, they should not exceed two
years.
Yes, for example, those customers
with whom the employee has had
personal dealings, or for whom the
employee has carried out a cus-
tomer management role.
As a general rule, employers should
include a contractual penalty in the
non-compete clause.
No. They are usually dealt with as
part of a non-compete restriction
and the same limitations and con-
siderations apply (see Non-competi-
tion).
See Non-competition.
They should be limited to existing
customers.
Non-compete agreements must be
in writing to be valid.
It is generally held that a non-com-
pete covenant is not valid if it pre-
vents an employee from continuing
to carry out an activity which is part
of his specific professional skills, in
a way so as to earn enough money to
support himself and his family with
dignity.
These are not common and labour
law does not expressly deal with
them. The authors believe that such
restrictions are valid and fall within
the broader scope of non-compete
obligations. Thus the same regula-
tions will apply (see Non-competi-
tion).
Yes. As with a covenant not to com-
pete, consideration should be con-
sistent and proportionate to the ac-
tual limitations imposed on the
employee.
Yes, if they fall within the broader
scope of non-compete obligations.
However, the courts may take a
more liberal view on this.
It seems probable that these
clauses need not necessarily be lim-
ited to a specific category of cus-
tomers, for example, those with
whom the employee had direct con-
tact during employment, provided,
however, that the limitation is
clearly defined.
If the employer breaches the em-
ployee's contract as a result of the
way the employment is terminated
(for example, by failing to give the
correct notice period), the employee
is automatically released from con-
tractual non-compete restrictions.
Even if no non-compete clause has
been included in the employment
contract, a former employee may be
prevented from competing if he
commits a wrongful act, such as en-
gaging in illicit competition.
Yes, either as part of a non-compete
clause or as a separate clause. A
customer protection clause is nor-
mally seen as a limited non-com-
pete clause (see Non-competition).
No, not normally. Only in the quite
exceptional situation where the re-
striction is held to significantly im-
pede the employee from taking al-
ternative employment will a court
order the employer to pay the em-
ployee compensation for the dura-
tion of the restriction, although
there is no reported case law sup-
porting this (but see Non-competi-
tion).
Limiting the restriction to certain
types of customers (for example,
those with whom the employee has
had personal dealings or for whom
he carried out a customer manage-
ment role) aids enforceability of the
clause.
The courts will not rewrite post ter-
mination restrictions to make them
enforceable. They may "sever" of-
fending wording, but subject to spe-
cific considerations.
Given the enforcement difficulties
involved with non-competition
clauses, an employer may wish to
put an employee on garden leave in-
stead, as this can often achieve the
same objectives.
Such restrictions are often entered
into at the start of employment or on
a promotion. On termination, if the
employer wishes an employee to en-
ter into new post-termination re-
strictions, this is likely to form part
of a compromise agreement (see
Non-competition).
A geographical restraint will be ap-
propriate if the customers are lo-
cated in a specific area, and it must
be limited to that area.
Yes. Again, the appropriate length
depends on the nature of the cus-
tomer connections the employer is
seeking to protect. The duration of a
non-solicitation clause will probably
come under less scrutiny than a
non-compete restriction because it
is a less draconian restraint, but
generally, the maximum period
should nevertheless be 12 months,
dependent on the customer cycle.
Such clauses should clearly identify
the client or customer who must not
be solicited, and be linked (and lim-
ited) to those contacts with whom
the employee had personal contact
or dealings for a limited period be-
fore he left the employer.
52
Depending on the specific case the
clause could be limited to cus-
tomers for whom the employee has
worked.
No. The prevailing principle is that
an employee has the right to choose
his employer. As a result, generally
such clauses cannot protect an em-
ployer from solicitation of this type.
However, if the employee solicits a
large number of key employees with
the intention of harming the em-
ployer's business, the employer can
defend himself by seeking an in-
junction and claiming damages.
Such restrictions do not require pay-
ment on entering into them, or post
employment.
No.
No.
No.
No.
No, and they are not covered by labour
law. The courts may consider this particu-
lar type of restriction to be a form of non-
compete obligation (see above), and thus
subject to the same legislative provisions.
An employer who seeks to prohibit a for-
mer employee from soliciting other em-
ployees should therefore make express
contractual provision to this effect.
See Non-competition, on the assump-
tion that courts will apply these rules.
These restrictions generally restrict the
former employee from soliciting all other
employees to leave their employment. It
seems reasonable that these covenants
should be limited to particular areas, if
possible (see Non-competition).
In the authors' view, such restrictions
need not be limited to certain types of
employees.
No.
Yes, these commonly form part of a
non-compete clause.
Limiting the restriction to certain
types of employees (for example,
those at a certain level, or those with
whom the employee was in direct
contact) will make the clause easier
to enforce.
See above.
The same strict rules govern the enforce-
ability of post-termination customer non-
solicitation clauses. With this type of re-
striction, it is the relationship between
the customer and specific employee
which is the most relevant consideration.
Yes. Here the interest the employer is
seeking to protect is the stability of the
workforce, which the courts have recog-
nised as a legitimate interest capable of
protection. The same general principles
apply as before, in that the clause must
be no wider than is strictly necessary to
protect that interest. The departing em-
ployee's ability to influence certain em-
ployees will be the most relevant consid-
eration for the purposes of
enforceability.
No, but must instead be confined to cer-
tain categories of employees (see below).
Yes. Again, the duration of this type of
clause will probably come under less
scrutiny than a non-compete restriction,
but the employee will be most able to in-
fluence others immediately after the ter-
mination of his employment.
The clause should clearly identify spe-
cific categories of key employees who
must not be solicited. A clause which ap-
plies to the whole workforce will not be
upheld.
In addition, this clause should be re-
stricted to employees with whom the re-
strained employee will have material
contact or dealing during employment.
Do any other limitations have to be im-
posed?
What are the remedies available for
Are any other considerations relevant?
NON-SOLICITATION OF EMPLOYEES
Are express non-solicitation of em-
ployee restrictions commonly used?
Do such restrictions require payment
on entering into them, or post-employ-
ment?
in geographical scope?
in time?
to certain types of employees?
Yes.
There is no legal requirement for pay-
ment.
No.
They should, ideally, be limited in
time. In any event, there is an obliga-
tion under French law not to solicit
employees.
No.
54
No.
See Non-competition, on the as-
sumption that courts will apply
these rules.
Almost all Italian courts agree that
hiring one or more of a competitor's
employees does not usually amount
to unfair competition as employees
should be free to compete in the
labour market and the employer
should be free to offer jobs to quali-
fied candidates. In certain circum-
stances it may amount to unfair
competition, although the courts do
not always agree what these circum-
stances might be.
This type of clause is not covered by
the law and has not been dealt with
by the courts. Nevertheless, such
obligations may be held enforceable
if they form part of a more general,
non-compete agreement. On the
other hand, if no non-compete
obligations have been agreed, then
contacting suppliers may well be
permissible (although a specific
agreement prohibiting this type of
interference could be executed
upon termination).
While the law is not settled on this
point it is possible that the courts
may apply the rules regarding non-
competition covenants (see Non-
competition).
See previous answer.
No.
No.
No. Such a clause will be enforce-
able if the employee agrees to be
bound by it. The same considera-
tions apply as those regarding cus-
tomer protection and non-solicita-
tion of employees' clauses (see
above).
See Non-solicitation of customers
and Non-solicitation of employees.
No.
No.
Such clauses can be used but are
largely untested in the courts.
The law is not settled on this point
but a geographical restraint may be
an appropriate way to limit the
scope of the clause to enhance its
enforceability.
No.
The employer should not rely on the
protection of such a clause.
No. This type of clause is not cov-
ered by the law and has not been
dealt with by the courts. If at all
agreed such clauses should be dealt
with as part of a non-compete re-
striction, and be limited to suppliers
essential to the core business of the
company.
The restriction could extend to the
company's suppliers worldwide.
No.
Enforcement of the liquidated
damages clause if provided by con-
tract. A court can, however, decrease
the amount payable if it considers
the amount stipulated by the clause
to be excessive.
Damages from the employee or
his new employer in appropriate cir-
cumstances.
Note that it is generally very difficult
to prove non-solicitation.
These types of clauses are not en-
forceable under French law because
it is considered that they do not pro-
tect a legitimate business interest.
Moreover, such clauses would be
held to breach suppliers' freedom to
contract.
N/A
N/A
N/A
imposed?
What are the remedies available for
Are any other considerations relevant?
NON-INTERFERENCE WITH SUPPLIERS
Are clauses expressly preventing the non-
interference with suppliers after termina-
tion commonly used?
Do such restrictions require payment on
entering into them, or post-employment?
Do such restrictions need to be limited in
geographical scope?
Do such restrictions need to be limited in
time?
56
Restrictions should be limited to
certain types of suppliers, prefer-
ably, exclusive suppliers of goods
and services, or suppliers who have
provided goods and services or have
agreed to provide goods and ser-
vices to the employer during a par-
ticular period before or after the
date on which the employee's em-
ployment is terminated.
In addition, a link must be estab-
lished between the ex-employee and
the relevant contact, that is, he
must be someone with whom the
employee had personal contact or
dealings before leaving the com-
pany.
In this type of clause, the relation-
ship between the supplier and the
employee will be the most relevant
consideration.
Ellen Temperton, Allison Brown and
Marina Murray, Baker & McKenzie,
London
ited to certain types of suppliers?
imposed?
Are there any other relevant consid-
erations?
Contributors
N/A
N/A
N/A
N/A
Denise Broussal and Sophie Cahen,
Baker & McKenzie, Paris
Yes, they should be limited to sup-
pliers to group companies the em-
ployee worked in and of which he
would have had knowledge.
No.
Such a restriction will not be valid:
In respect of employees who
have no dealings with suppliers.
If it completely prevents the
employee from working in his pro-
fession.
In this case, it will be difficult to
identify a legitimate interest of the
employer which may justify prevent-
ing the employee from using certain
suppliers.
As the courts have not yet dealt with
such clauses, it is not clear whether
they would share the above views.
Christian Reichel, Baker & McKen-
zie, Frankfurt
No.
Karianne Kas, Baker & McKenzie,
Amsterdam
Uberto Percivalle and Valentina Po-
mares, Baker & McKenzie, Milan
www.practicallaw.com/global
PLC
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