Legal Updates

A non-competition clause will be enforced only if protects a joint interest is not a meant ‎only to limit competition

November 2, 2015
Print

An employment agreement contained a prohibition in the field for a year, and that the ‎employee will transfer to the employer any trade secrets, including customer lists he may ‎have. ‎

The Labor Court held that a non-compete clause need be reasonable and meant to protect ‎the interests of both parties. A non-compete clause will be upheld only if it protects a ‎‎“legitimate interest” of the employer as to the existence of any trade secret, and when the ‎employee received a special payment for the agreement not to compete with the current ‎employer. Protection of a legitimate interest does not mean prevention of any future ‎competition, and shown that this was the intent of the employer, the clause will not be ‎upheld. The Court also noted that a list of customers could be treated as a trade secret but ‎only in a case where it has added value such as details of the terms of engagement with ‎the customers. However, in the current dynamic market, the value of “old” information ‎concerning the terms and conditions of engagement and customer names quickly becomes ‎invaluable. Because in that case there was no legitimate interests to protect and the ‎costumer list was not really a trade secret the Court dismissed the claim.‎