The court partially upheld the claim because it did not find that the defendant had usurped the plaintiff’s clients.

The Social Chamber of the Superior Court of Justice of Madrid (STSJ 13576/2022), rejecting the appeal filed by the former employee, ratified the decision of the Court that partially ordered him to pay five thousand Euros to the company for breach of the non-competition agreement in the employment contract.

The former employee violated the agreement signed with the company, since in the new company in which he was hired he performs the same professional duties and competes directly with the former employer. Even the corporate purpose of both is identical, as well as the development of similar applications.

In this regard, the court pointed out that the non-competition agreement, for after the termination of the employment contract, insofar as it implies a restriction of the freedom to work, requires for its validity and lawfulness, apart from its limitation in time, the concurrence of two requirements:

  • A commercial or industrial interest must be justified by the entrepreneur.
  • An economic compensation must be established.

In this way, a double interest is generated: for the employer, the non-use of the knowledge acquired in other companies and, for the employee, to ensure economic stability at the end of the contract, avoiding the urgent need to find a new job, generating reciprocal bilateral obligations.

It also adds, “Well, in response to the appellant’s statement, we must point out that the post-contractual non-competition agreement, by its very nature and beyond what may be specified in the clauses included in the contract to that effect, obliges the employee not to carry out activities on his own account -as a self-employed person or through companies- in the same market as the employer, without it being necessary that clients are actually attracted, since it is sufficient that such activities affect the same potential clientele”.

He adds, “In this case it has been demonstrated that the defendant violated the agreement signed with the now plaintiff company, since it is evident that in the new company he performs the same professional functions and competes directly with the former employer because the corporate purpose of both is identical, as well as, specifically, the development of similar applications“.

Finally, the court decided to partially uphold the claim because there is no evidence that the defendant has usurped clients of the plaintiff, nor bad faith of the latter, however, it represents a jurisprudential advance in the cataloging of these behaviors, even more so considering its verification after the termination of the employment relationship.

For more information on these topics, please contact our #azLabor group:

Jorge Arredondo | Partner |

Jocelyn Aros | Senior Associate |

Felipe Neira | Associate |

Alejandra Figueroa | Associate |