Invalidity of non-competition clause in employment law

• Author: Alina Rotaru
• Pages: 142-148

INVALIDITY OF NON-COMPETITION CLAUSE IN EMPLOYMENT LAW

PhD student Alina ROTARU

1

Abstract

The need to introduce some special clauses in a separa te main contract appea red from the need of

employers to ensure the favourable conditions and prospects of car rying out economic activities with some rivals on

a competitive market, where staff fluctuations are frequent and the economic a gents appear and disappear with a

relatively high frequency. In the following article we want to answer some questions r elated to the validity of non-

competition clause, the causes leading to the invalidity of the non-competition clause, in what situation it is

necessary or not to insert such a cla use, stretching in time and in space of the non-competition clause.

Key words: non-competition clause, competitive mar ket, validity of clause, a busive practices, relative invalidity,

absolute invalidity.

JEL Classification: K31

In terms of a functional market economy, as it is the case with Romania, the special non-

competition clause appears to be on the foreground between the clauses of the individual

employment contract, through its significance and frequency. In the initial regulation of the

Labour Code, art. 2-24 of the Law no. 53/2003, the non-competition clause forces the employee

that, during the execution of the employment contract and only in exceptional cases, after its

termination, not to perform in his/her own interest or of a third party an activity that is in

competition with the activity carried out by his/her employer, not to perform an activity for a

third party that is a competitor of his/her employer.

The admissibility of non-competition clause in the individual employment contract

represented along time a discussed and analyzed subject. Although the whole legal literature

agrees about the usefulness of such clauses, the Romanian law on the matter, a mixture of

provisions adopted in profoundly different periods, allows the doctrinaire a little freedom of

movement

2

.

In the o pinion of a Romanian author “through the competition clause ... there is not

diminished a fundamental right, but there is established its exercise framework

3

”. Such

constitutional provisions concerning the obligation of each citizen to exercise his/her rights in

good faith, in compliance with the principle of proportionality between restriction and the

situation that determined this limitation.

According to article 21 paragraph 1 of the Labour code „the clause must be expressly

stipulated in individual employment contract” either upon the conclusion or during its execution.

Inserting this clause in the individual employment contract is not mandatory, the

employer and the employee will decide if they will conclude or not this agreement.

Given that the employer is interested in ensuring conditions and prospects favourable to

the carrying out of its economic activity, it may resort to traditional methods of amiable,

transactional settlement with a specific competitor or to the achievement of some independent

conventions, in the form of special clauses inserted in a main distinct contract.

By the insertion of the non-competition clause it is intended to remove abusive practices,

to avoid competitive situations between the former employee and the employer.

1

Alina Rotaru, Bucharest University of Economic Studies, alina.rotaru@gmail.com.

2

Raluca Dimitriu, Duty of loyalty in employment relationships, Tribuna Economic Publishing House, page 91

3

Alexandru iclea, Non-competition clause in the individual employment contract, Journal of Commercial Law, no 7-8/1999