Legal Updates

An employee may provide service to customers who contacted him after termination of employment

October 14, 2020

A company that provides business insurance consulting services demanded that its former employees are banned from any business relationship with its customers.
The Labor Court dismissed the claim and held that the employees did not breach the contractual undertaking of non-compete in their employment agreement and that their freedom of occupation shall not be restricted. A restriction on the freedom of occupation in a personal employment agreement has weight only if it is reasonable and intended to protect a legitimate interest of the employee and employer (such as the existence of a 'trade secret'), because otherwise the constitutional right to freedom of occupation prevails. Here, five employees resigned and moved to another company that provides consulting services in the same field of practice while in their employment agreement they undertook not to contact, directly or indirectly, company customers for a period of 18 months after the termination of employment. Clients who received personal attention from one of the senior employees received an email informing them about the termination of employment at the company. As a result, 7 customers terminated their business relationship with the employer and sought to continue receiving service from the specialist employee through his new employer. As the customers who left wanted to continue working with the employee on their own initiative and of their own free will, after being satisfied with his professionalism and expertise, which was unique but not secret in any sort and part of the employee's skills, the freedom of occupation may not be restricted.