Restrictive covenants in employment contracts

http://bworldonline.com/content.php?section=Opinion&title=Restrictive-covenants-in-employment-
contracts&id=76939

Restrictive covenants may include: (a) non-competition/non-compete clause -- when the employee
is prevented from directly competing or working for a competitor of his former employer, or when the
employee is prevented from setting up a competing business; (b) non-solicitation clause -- when a
duty is imposed on the employee not to approach his former employer’s customers or prospective
customers, or when the employee is prevented from taking customers/clients of his former employer;
and (c) non-poaching clause -- when the employee is prevented from enticing his former employer’s
staff away from the business, the aim is to prevent the employee from taking key employees with him to
his new employment or business.

The validity of restrictive covenants, such as those mentioned above, is anchored on law and applicable
jurisprudence.

Thus, the employer and the employee may establish such stipulations, clauses, terms, and conditions as
they may deem convenient (Art. 1306, Civil Code), and that the obligations arising from the agreement
between the employer and the employee have the force of law between them and should be complied
with in good faith (Art. 1159, Civil Code) (Oxales v. United Laboratories, Inc. [G.R. No. 152991, 21
July 2008]).

Likewise, restrictive covenants are enforceable in this jurisdiction, unless they are unreasonable. And in
order to determine whether restrictive covenants are reasonable or not, the following factors should be
considered: (a) whether the covenant protects a legitimate business interest of the employer; (b)
whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious
to the public welfare; (d) whether the time and territorial limitations contained in the covenant are
reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy ( Rivera v.
Solidbank Corp. [G.R. No. 163269, 19 April 2006]).

Restrictive covenants are not necessarily void for being in restraint of trade. In deciding to include a
restrictive covenant in the employment contract, employers must see to it that there are reasonable
limitations as to time, trade and place (Tiu v. Platinum Plans Phils., Inc. [G.R. No. 163512, 28
February 2007]).

Non-solicitation, in contract law, refers to an agreement, typically between an employer and employee,
that prohibits an employee from utilizing the company's clients, customers, and contact lists for personal
gain upon leaving the company.
A non-solicitation agreement is a common contract clause that says if you work for a competitor, you
won't solicit any business clients, bring over any employees, or use any confidential information
connected to your current job. In other words, you can't use your old company contacts to help your new
company. In any business, two of the most important groups of people are the employees and the
customers. Stealing customers takes something extremely valuable from a company.
https://www.upcounsel.com/non-solicitation