Definition and Types of Restrictive Covenants
During the employment relationship, employees are obliged in respect to employer´s intellectual property, confidentiality and no competition. There are no specific laws about restrictive covenants after termination of employment. However, the Constitution provides freedom of work, which means that the employee may challenge any non-compete or non-solicitation provisions after termination of employment.
The following restrictive covenants are recognized and may be enforceable under the law:
- Non-compete clauses;
- Non-solicitation of customers.
However, non-solicitation of employees in unenforceable in Argentina due to the employee´s constitutional right of freedom to work.
Enforcement of Restrictive Covenants—process and remedies
Non-compete or non-solicitation of customers covenants after termination of the labor relationship must comply with specific requirements to be enforceable. The provision should be limited in time (maximum 2 years), compensated (at least 50% of monthly salary approx.) and clearly outlined the geographical and industry/companies scope.
Use and Limitations of Garden Leave
Labor laws have no specific provision regarding garden leave. Employers cannot force employees to take garden leave (paid leave), since the employer is obliged to give work to the employee. However, the employee can accept the garden leave, in which case the employee must be paid his salary and benefits in full, as if he was working.