Restrictive Conditions in Employment Agreements

Abstract

During working activity, employee accesses commercially valuable information on the employer including the specifics of organizational structure, business, client base etc. The interest of the employer to keeping such information is evident. Cessation of labour relations may involve risks: besidedirect damages which may reach six annual salaries of an employee dismissal may result in losing goodwill, competition with the former employee, stealing clients and other employees. Abroad, rightsand legal interests of employer are seriously protected in the event of terminating work agreement. Minimizing risks of the employer is reached by various ways in particular by including in employment agreement restrictive covenants forbidding the employer to perform certain activity after terminating the work agreement. The range of restrictive covenants used abroad is wide: bans to compete with the employer, employment restrictions on a certain territory, ban on stealing clients and colleagues etc. In turn, Russian legislation provides a relatively narrow range of tools to solve similar issues. However, the number of court disputes on introducing loyalty bonuses, non-competition and other restrictions grows. The aim of the paper is to outline some ways of solving issues on the competition between employee and employer in some foreign countries, criteria considered by court when assessing the efficiency of restrictive covenants. Besides, the paper presents approaches to regulating this sphere of Russian law and trends in legal practice.