08. Restrictive Covenants

Definition and Types of Restrictive Covenants

Provisions on restrictive covenants in Colombian labour law are scarce. The legislation only provides rules for non-compete clauses. Scholars have tried to bring to employment contracts some restrictive covenants normally used for commercial/civil contracts, under the assumption that these clauses may be applicable to employment relationships, as its nature is similar to any other contractual relationship. Restrictive covenants are therefore allowed, under some general limitations. Any clause that may limit the employee’s right to work (which includes his right to access new employment) is considered ineffective and cannot be enforced by a judge, even if the employee consented to the use of such a clause.

Types of Restrictive Covenants

• Non-compete clauses

Article 44 of the Colombian Labour Code expressly allows for the possibility of the employer to agree with his personnel, on a general prohibition to provide services in determined activities or the employer´s competitors. This class of non-compete clauses are only allowed by law while the employment contract is ongoing. Non-compete clauses for employees that are meant to apply after the employment contract has ended, are invalid.

• Non-solicitation of customers

Such a provision does not exist in Colombian labour law. However, restrictive covenants on non-solicitation of customers are often used for high-executive employees. Scholars have understood that these kinds of specific clauses are valid as long as they respond to a principle of proportionality and reasonability.

While a clause of this nature may restrict the former employee’s right to work, a limitation on the former employee’s possibilities to perform actions that might harm the company through direct solicitation of customers, are proportional and reasonable to protect the company interests.

In any case, competition law establishes special provisions towards the restrictions of conducts that might be considered unfair competition.

• Non-solicitation of employees

These types of restrictive covenants are not normally used for employees in their employment contracts, but rather between companies in their commercial relationships to avoid possible acts of unfair competition. The applicability of these clauses between companies must attend criteria of proportionality and reasonability to avoid a possible violation of the right to work.

Enforcement of Restrictive Covenants – Process and Remedies

Restrictive covenants may be included in the employment contract (normally used for non-compete clauses) or in separate documents during the employment relationship or after it. A violation of a restrictive covenant during the employment contract can be subject to disciplinary measures from the employer and eventually the termination of the contract with a fair cause. The violation of a restrictive covenant, which intends to apply after the employment relationship ends, can be enforceable through a legal claim against the former employee

Use and Limitations of Garden Leave

Garden leave practice is allowed in Colombian labour law. The employer can restrict his employees from attending to work, but the obligation to pay their salary, as if it was a unilateral paid leave, remains. However, this possibility finds a limitation whenever the request from the employer for the employee to receive the unilateral paid leave may lead to a discriminatory measure or possible conduct of harassment against the employee.