Definition and Types of Restrictive Covenants
The sole restrictive covenant that is regulated by the Labour Code is the non-compete clause. With this type of clause, the employee shall refrain from engaging in any independent activities, which correspond to those of his/her former employer and which compromise the employer’s interests, following the end of his/her employment.
The following restrictive covenants are recognised 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
Under the Labour Code, there is no obligation to provide financial compensation for the non-compete covenant. The non-compete clause is not applicable in cases where the employer has terminated the contract for gross misconduct and the termination is considered wrongful or does not observe the legal notice period.
Use and Limitations of Garden Leave
An employer can exempt an employee from work during the notice. There is no statutory right to pay in lieu of notice, but during the exemption the employee must be remunerated with the same salary and benefits as if he/she were working.