Definition and Types of Restrictive Covenants
Any type of agreement in an employment contract or obligation that either restricts the employee from taking some action or which requires the employee to abstain from a specific action, falls under the definition of a restrictive covenant. The following restrictive covenants can be included in the employment agreement, during the labour relationship 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
In Chile, there are no labour rules expressly regulating restrictive covenants or prohibiting them. However, the Chilean Constitution explicitly protects the employee’s freedom to work and the right to free choice. Nevertheless, non-compete clauses after labour termination have been accepted as valid when they are provided for in writing; a form of compensation is paid to the employee; and their duration is reasonable. In practice however, enforceability is difficult.
Use and Limitations of Garden Leave
An employee who is leaving a job, having resigned or otherwise had his employment terminated, is instructed to stay away from work during the notice period, while remaining on the payroll. Garden leave is not regulated in Chile. As a result, the parties could agree to such a scenario, but the employer however, cannot unilaterally impose it.