Definition and Types of Restrictive Covenants
There is no specific regulation in Brazil about restrictive covenants and its enforceability after termination of employment agreements. However, the Brazilian Federal Constitution establishes freedom of work, which means that the employer cannot force or oblige an employee to remain employed and/or impose other obligations not to hire its own employees.
Also, Brazilian Industrial Property Law prevents an employee from disclosing or using the employer’s confidential information, without its authorization, at any time (during the employment or after its termination, for an indefinite period), under the penalty of characterization of the crime of unfair competition.
The following restrictive covenants are recognized and may be enforceable under the law:
- Non-compete clauses;
- Non-solicitation of customers;
- Non-solicitation of employees.
Enforcement of Restrictive Covenants—process and remedies
The parties may negotiate the restrictive covenants to be enforced after termination (a) at the beginning of the relationship – in the employment agreement or in a separate document, (b) during the relationship, (c) at the end of the relationship. In the event of violation of the restrictive covenants, it is possible to file a judicial claim.
Use and Limitations of Garden Leave
Garden leave in Brazil is not legally regulated and it is not a common practice. The enforceability of a garden leave provision may be easily challenged in courts.