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08. Restrictive Covenants

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08. Restrictive Covenants

Definition and Types of Restrictive Covenants

Employees must respect the provisions on intellectual property, confidentiality and noncompetition 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, non-solicitation of clients and non-solicitation of employees are clear examples of

restrictive pacts.

  • Non-compete clauses

It is understood that the enforceability of these clauses after labour relationship termination requires the payment of a compensation and a reasonable term.

  • Non-solicitation of customers 

Also agreed in key positions. A reasonable term is suggested.

  • Non-solicitation of employees

Also agreed in key positions. A reasonable term is suggested.

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

In Peru, the concept of ‘Garden Leave’ does not exist.

Any questions

Ask our member firm Estudio Muñiz in Peru