Compensation for the non-compete agreement

Any post-contractual non-compete agreement must always be formalized in writing and meet the following requirements:

• It cannot exceed the maximum duration provided for in the regulations (two years from the termination of the employment relationship).
• There must be a genuine industrial or commercial interest of the company.
• It must involve adequate compensation.

To determine what lump sum amount or what percentage of the annual salary is considered adequate, it is necessary to assess whether it compensates for the sacrifice that the affected party makes by not providing services for a certain period in a specific field of activity, whether as an employee or self-employed.

Generally, there are two payment modalities (or moments):

• On one hand, it can be agreed to pay a percentage of the salary during the employment relationship.
• On the other hand, it can be agreed that the payment will be made when the employment contract is terminated, either in a single payment or in installments during the agreed period.

In the case of paying a percentage of the salary, it is advisable to establish minimum and maximum amounts, in case the employment relationship ends earlier than expected or extends over time.

If it is agreed that the payment will be made upon termination of the employment relationship, it is advisable to do so in installments to have better control, or if paid at once, the worker must prove for two years that they are complying with the agreement (by providing some document, such as work history).

 

Our professionals will inform you about any questions you may have regarding the post-contractual non-compete agreement.