Shawerma wrote:There was a clause in my employment contract in which I agreed not to work for a competitor for a period of two years after discontinuing employment with the company. During the signing of my contract, I felt immense pressure to sign everything at the time since I had already moved my family over from overseas and since I had told my other job options that I had decided against their offers.
My question is whether such a clause is legal. I have been told that this is not legal in the US. I have also been told that it is probably not legal in Taiwan but would like to know for sure.
I know that when someone quit recently, the company didn't even ask where he was going. In other words, they seem to know that the clause is not legal.
Would love to hear something more definitive. Thanks.
The starting point for any such post-termination restriction is that it is void on the grounds of illegality. However, if the ex-employer can convince a court that the covenant is:
designed to protect his legitimate business interests; and
that it extends no further than is reasonably necessary to protect those interests
then it will be upheld and enforced.
Edgar Allen wrote:My understanding is that in most jurisdictions this is not enforceable. Where it is enforceable 2 years would almost certainly be seen as excessive - unless you are remunerated for the lost opportunity to work for the competitor - i.e. they pay your salary for 2 years.
Of course proper legal advice would be ideal (and expensive) and in my experience will not give you a black and white answer.
The right thing to do is to work your notice as per your contract if you resign, and if you are made redundant to not work for a competitor for any period that you are paid in lieu of notice (usually known as gardening leave). In the 2nd scenario - dependent on how much money is at stake it may be worthwhile getting a lawyer to take a look.
I don't think the signing it under duress argument will work.
itakitez wrote:The other thing to watch would be the technical area and restrictions is may place on your new employer
There is a watch-maker case in Europe where the former employees (engineers) rounded up their knowledge and used this to form a new watch company and put a new watch on the market that was new-IP and did not infringe any IPR of the former company.
However, the court deemed that they had misappropriated the skill and development of the former company to get a product to the market quicker, with lower costs.
That's France for you though.
In the UK you can identify three types of knowledge.
1. Broadest - general skill in the art, such as how to keep a database or solder something, you cannot be prevented from practicing these by any agreement - freedom to work
2. Specific company skills - skills that the company has taught you, these can be covered by a restrictive covenent, such as the above, although this seems to have a 6month time bar and other picky clauses. This may be semi-known skills in the art or results of their investment in your training and your position in the company.
3. Company IPR/Trade Secrets - these are already covered without a specific contract and, depending on position, would cover all company secrets, such as company IPR, manufacturing methods, product line developments...
However, this is limited to position and "reasonably expected to perform" such duties. So a salesman for Tatong would not be limited from developing a new fan and opening a company for this, likewise an engineer in their software dept. would also be allowed to develop this tech, however, a GM/Director should be "loyal to the company" so would be barred, as would a project manager of cooling systems or even a fan engineer. However, anything youre not supposed to know may also be covered.
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