The post-contractual non-competition agreement is an agreement between an employee and their employer in which the employee agrees not to engage in a similar work activity or compete with the company for a certain period of time after leaving the company.
This type of agreement is commonly used in industries where competition for talent and specialized knowledge is high, such as the technology or financial sector. The primary objective of this type of agreement is to protect the company’s confidential information and prevent the employee from benefiting from their experience and knowledge gained during their employment.
In Spain, the non-competition agreement is regulated by the Workers’ Statute. However, the validity and application of these agreements are subject to certain limitations and conditions. For example, these agreements are considered null and void if the imposed restriction is disproportionate or excessive.
Furthermore, the duration of the non-competition agreement is also subject to certain regulatory limits. For example, it must be made in writing, and the maximum limit is 2 years for technicians and 6 months for other workers. It is also necessary, as provided by article 21 of the Workers’ Statute, that:
a) The employer has a genuine industrial or commercial interest in it.
b) The worker is adequately compensated.
It is important to note that, despite the existence of a non-competition agreement, workers still have the right to seek employment and compete in the labor market. These agreements only restrict employees’ freedom to engage in work similar to that of their previous employer for a certain period of time and in a specific geographic area.
However, there are disputed assumptions in case law, such as what happens when «the employer is left with the discretionary power to unilaterally decide, at the time of termination of the contract, whether to maintain or render the agreement ineffective; with the consequence of not paying the employee any amount if they unilaterally decide not to apply it.»
This is what has been discussed in STS 347/2024 – ECLI:ES:TS:2024:347, where the appellant also indicated regarding the indicated «that such an option undermines the expectations of the employee who tries to organize their professional activity outside of the company in compliance with the commitment assumed in the contract.»
Thus, the Supreme Court establishes that: «the bilateral nature of the post-contractual non-competition agreement prevents it (in its birth, effectiveness, and compliance) from being conditional upon the subsequent will of the company. The clause that grants exclusive power to the employer for such is null and void.»
This means that the employer cannot have exclusive control over the validity and application of the non-competition agreement with the employee.
It should be noted that in the event of a breach by the employee, there may be an obligation to pay compensation to the employer.
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