Relevant aspects of the post-contractual non-competition agreement

Other relevant aspects of the post-contractual non-competition agreement

In the previous article we took a brief tour of what a post-contractual non-compete clause was (Read: What is the post-contractual non-competition agreement), by the objective pursued by it, as well as the main requirements that it must have and its interpretation by the courts, but there are still another series of aspects that are also particularly interesting and that deserve our attention.

So, in this article we take a tour of all of them.

How should a post-contractual non-compete clause be collected?

When we talk about the way in which this agreement should be collected, we refer to the form. In this sense, note that the regulation of Royal Decree 1382/1985, of August 1, which regulates the special employment relationship of Senior Management personnel, does not include any requirement in this regard, and must comply with the regulatory principles of law and contracts.

In this context, what is necessary for said agreement to be valid is that it be “express”, that is, that both parties have full proof that it exists.

Thus, although the written form is not necessary, it can be considered highly recommended since it is the easiest way to prove its existence in case of dispute between the parties.

Likewise, we must emphasize that the effective application of this agreement can in no case be left to the free will of one of the parties, since the Supreme Court has already declared that it would be considered void when contravening art. 1236 of the Civil Code.

When should the post-contractual non-competition agreement be signed?

Nothing is established in this regard in the Royal Decree cited in the previous section, so we must attend to the casuistry of this type of clauses or agreements. As there is no legal requirement, it can be established at any time as long as it is effectively linked to the professional relationship maintained between the parties.

• At the time the contract is signed: It occurs in those cases in which the post-contractual non-competition agreement is negotiated simultaneously with the rest of the clauses and is included in the contract to be signed by the beginning of the relationship.
• During the relationship between the Senior Manager and the company: Throughout a professional relationship there can be various milestones, including the development of certain products, strategies, etc. or that the Manager, in view of his specific functions, becomes aware of an aspect that already existed in the company but was unknown to him. In these cases, a post-contractual non-competition agreement can be reached that will be attached as an annex to the contract that binds the parties.
• At the end of the employment relationship: It may happen that although during the professional relationship the parties considered that it was not necessary to reach an agreement of this type due to the prevailing circumstances, at the time of the definitive separation if they believe it is convenient to protect certain aspects and decide to adopt this agreement.

What happens if one of the two parties breaches the post-contractual non-compete agreement?

It may happen that despite the fact that the clause was fully valid and had been constituted in accordance with the legal requirements, when the contract was terminated, one of the two parties decide not to comply. Sometimes these breaches are caused by a defective wording of the agreement that entails a different interpretation of each of the parties.

If the employer fails to pay the agreed amounts:

In these cases, the Senior Manager has several alternatives.

• Pose an action to claim the amount to request compensation for the payment due: This will be the path that the Senior Manager must adopt if he is complying with the competition agreement or is in a position to want to do so. For the filing of said action, the general prescription period of one year operates. Note that it is legally debatable and various courts have considered it that the Senior Manager has the right to claim the unpaid amount when he is not in a position to provide a service competence, as it could be in cases of retirement, leave, etc.
• Require the resolution of the post-contractual non-competition agreement: It may happen that even if the employer does not pay, the Senior Manager prefers to request the resolution of the agreement since he is available and wants to provide services for a company that develops a activity that is concurrent with the first. In short, he prefers to start providing those services that involve competition than collect the agreed compensation because it is more beneficial to him.

If the Senior Manager fails to comply when carrying out this concurrent activity prohibited by the agreement:

In these cases the employer has the following alternatives.

• The company can stop paying the agreed compensation: In these cases, the company stops paying the set amount, although we must bear in mind that it can cause problems when the Senior Manager understands that he was complying with the agreement and proceeds to claim payment due through a quantity action.
• The company may request the Senior Manager to comply with the agreed non-competition obligation and therefore to cease the concurrent activity it is carrying out. In relation to this requirement, it is necessary to take into account that it is not an easy matter to handle when there is a third company, since it would ultimately imply the challenge of a Senior Management contract with a third party that has nothing to do with the non-compete agreement reached. In order to avoid this obstacle, sometimes in these post-contractual non-competition agreements a penalty clause is included that the Senior Manager will have to pay in case of non-compliance.

Conclusion

To conclude and in accordance with all the previously mentioned aspects, a post-contractual non-competition clause must have been expressly agreed upon, if possible in writing, and never be left to the free will of one of the parties.

Likewise, it can be agreed both at the beginning of the employment relationship, during it or at the end, although its effects will unfold once the professional relationship has concluded.< /p>

Finally, note that in the event that one of the two parties does not respect the agreement in any of its facets, the other party will be empowered to require compliance.

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