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08. Restrictive Covenants

Definition and Types of Restrictive Covenants

Employees must respect the provisions on intellectual property, confidentiality and non-competition related to the employer during the employment relationship. There are no specific laws on restrictive covenants after the termination of employment. Nevertheless, the Constitution establishes freedom of work, which means that the employee can challenge any restrictive covenants after termination of employment. However, the doctrine understands that restrictive covenants are entirely applicable as long as they are limited in time, geographic scope, clients and activity, products and services, and if compensation is paid in exchange.

Types of Restrictive Covenants

  • Non-Compete Clauses

Non-compete, non-solicitation of clients and non-solicitation of employees are clear examples of restrictive pacts.

  • Non-solicitation of customers

There is no rule in Dominican labour law regarding the provisions of non-solicitation of clients. However, it is widespread for Dominican employers to address this restriction in employee-management contracts. This type of regulation is rarely enforced by labour courts, which means few decisions on its applicability exist.

In effect, no jurisprudence in the Dominican Republic establishes existing restrictions on an employer’s ability to impose agreements not to compete, or agreements not to solicit clients or employees. However, the Dominican Republic generally follows the prevailing opinions of the jurisprudence and doctrines recognised in other Latin American countries. In general, restrictions are permissible as long as they are reasonable.

  • Non-solicitation of employees

In the Dominican Republic, the use of non-solicitation employee covenants is unusual. In our opinion, it is inapplicable due to the employee’s constitutional right to freedom of work.

Enforcement of Restrictive Covenants – Process and Remedies

Restrictive agreements, such as non-compete or non-solicitation of clients, after the termination of the employment relationship, must meet specific requirements to be applicable, as noted above. In particular, they need to be reasonable and they must be signed after the employment contract has ended.

In the event of a violation of the restrictive covenants, it is possible to file a lawsuit. In our opinion, the Labour Courts are not competent to hear disputes on post-employment restrictive covenants. The only possibility of execution therefore, is before the civil courts.

The employer may also exercise a civil action claiming the damages derived from said infringement, or even take criminal action if the employee had access to confidential information or trade secrets in the performance of his duties.

Use and Limitations of Garden Leave

Garden leave is the practice by which an employee, who leaves a job, is obliged to stay away from work for a period, while the employee is still on the payroll. This practice is frequently used to prevent an employee from using sensitive information when they leave their current employer, especially when they are very likely to join a competitor.

Garden leave in the Dominican Republic is not legally regulated, nor is it a common practice. Employers cannot force employees to take garden leave. Please consider however, that the employee can agree not to work for a certain time after the contract’s termination, but he must receive reasonable compensation (e.g., the salary and benefits in full as if he were working).

Any questions

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