1. Definition of Restrictive Covenants
Post-termination covenants are valid under certain conditions. In principle, covenants regarding confidentiality are normally used for all kinds of employees. However, when it comes to non-compete covenants, such covenants should normally only be used for employees whose position in the company makes such restrictions necessary. The period of a non-compete covenant should not exceed a maximum of 18 months. There is no such limitation in time for non-solicitation covenants, but in general they adhere to the time limitations set forth in non-compete covenants. The main rule is that post-employment restrictive covenants are valid only if they are reasonable.
2. Types of Restrictive Covenants
The most common post-termination restrictions are confidentiality, non-competition, and non-solicitation of employees and customers.
3. Enforcement of Restrictive Covenants—process and remedies
Covenants are normally combined with a contractual penalty. The penalty shall be reasonable in relation to the employee’s salary. Normally such penalty for each breach of the clause is set to between three and six months’ salary.
4. Use and Limitations of Garden Leave
The employer may under certain circumstances unilaterally release the employee from the duty to perform work during the notice period. When the parties agree on a mutual separation, it is common to agree also on a release from work, i.e. garden leave.