How are world IT companies protected from competitors in the person of former employees?

In this topic, I am an outside observer - often I translate various contracts and agreements about this pain for IT companies.

Once I asked myself a question: how are the countries in general, and, first of all, in Russia, protected from this trouble?

About non-competition

In general, an employee’s care is 3 “polar chanterelles”, not just one.

Departed employee:

1. creates his own company or arranges for competitors (I don’t even know what is worse);
2. carries with it the head, which keeps a lot of confidential information and developments;
3. takes away employees, as a rule, the most valuable, than does "chanterelle" even more fully.

No matter how well you treat an employee, you will inevitably think about various restrictive agreements, denoted abroad by the general term non-competes .

We will talk about them.

What does non-competes include?

There are several types of possible restrictive agreements:

• non-disclosure agreement . It is intended to prevent the leakage of any confidential information. It is used in most developed countries.
• non-solicitation agreement prohibition agreement . The name of the agreement speaks for itself.
• non-competition agreement . The agreement specifies the restrictions for the employee regarding the work in the company of competitors or the creation of his own company.
• agreement on the non-proliferation of negative information (non-disparagement agreement) . We are talking about the non-proliferation of information defaming the company. This includes information about the company's internal policy and other information that is dangerous for its reputation.
• non-interference agreement . In accordance with this agreement, employees are prohibited from discussing the personnel policy of the company and enticing personnel to work in another company.
• non-dealing covenant obligation . Prohibits interaction with customers of the previous employer on any issue.
• agreement on suspension from work before leaving with salary (garden leave) . The essence of the restriction lies in the fact that from the moment of receipt of the notice of the dismissal of an employee they are sent on paid leave. He remains on this leave until the moment of actual dismissal from the company. Thus, the employee is removed from his activities for a time sufficient to ensure that the information he has is outdated. Accordingly, subsequently he will not be able to use it.

Among the listed restrictive agreements, the non-competition agreement , hereafter the NCA , is most often used. For the first time this document appeared in English law in the XVIII century. After which it began to be used in France, Germany, Spain, the United States and other countries.

NCA

An agreement on non-competition can be either part of a regular employment contract or a non-disclosure agreement, or a separate document. By signing this agreement, the employee undertakes not to get a job and not to entice employees to competitors for a certain period of time after the dismissal from the company. In addition, he can not engage in activities that are defined as competing with respect to the employer.

In addition to the time period, the agreement takes into account the following:

• scope of activities from which to abstain . The agreement states what kind of professional or entrepreneurial activity an employee cannot engage in. On the one hand, the conditions of the NCA are designed to protect the interests and rights of the employer. To this end, they indicate, for example, a similar position that an employee cannot hold, or a list of specific competing companies to which he cannot be employed. On the other hand, the head of the company has no right to deprive an employee of the opportunity to earn a living. If the NCA will completely restrict the employee’s right to work as a whole, including the sphere of activity to which the head of the company is not related, such an agreement may be invalidated.
• duration limit. The term of the restriction may be different - from 6 months to 2-3 years. The best option is within 1 year. It also indicates the starting point when this agreement begins to operate.
• territory in which it is forbidden to compete. It can be as separate federal lands, districts, counties or states, and the territory of the entire state.
• provisions on the law that governs this agreement. This item is of particular importance for those who sign an agreement with employees or companies from other countries. The document clearly states the legislation of which state or state is subject to this agreement. It may happen that the NCA will operate in a state where agreements of this kind are prohibited.
• mutual exchange of values: compensation, bonuses to payments under the main contract, salary increase . If the head of the company obliges the employee not to carry out his professional activities, he must somehow compensate for this. The options can be different - from a one-time payment of a certain amount after leaving the company to a salary increase while working at the position held. For example, the Italian Civil Code states that if an employer does not pay compensation to an employee who has signed the NCA, the agreement is invalid. The amount of compensation also matters. In accordance with the Illinois Labor Law of August 19, 2016, it is forbidden to offer employees to sign a non-competition agreement if their salary is less than $ 13 per hour.
• the right to terminate a non-competition agreement. This right is granted or not granted by law, under which a non-competition agreement is in force. Sometimes it can only be done by one of the parties. You can terminate the NCA and by mutual agreement. Again, indicate the period during which this can be done.
• liability for breach of agreement . In case of violation of the agreement, the employee, as a rule, pays compensation specified in the contract, compensates for the damage caused, or reimburses both. Also, liability for breach of obligations may be placed on the new employer. This happens if he knew about the NCA employee, which he recruits, but ignored this point.

Agreement on non-competition from the point of view of the labor legislation of the Russian Federation

Some employers in the Russian Federation seek to protect their business and enter into non-competition agreements with their employees. However, the courts declare such agreements illegal and, as a result, invalid. In accordance with Article 37 of the Constitution of the Russian Federation, all citizens of the country have the right to freedom of work, as well as the right to dispose of their own abilities. Accordingly, no one has the right to limit these rights in any way. In addition to the Constitution, the rights of citizens to work are protected by the Civil Code of the Russian Federation and are supported by a letter from the Ministry of Labor of Russia of October 10, 2017 No. 14-2 / ​​-942.

Other ways to protect the interests of the employer in Russia

There are other ways to protect the interests of the employer in Russia. These include:

• confidentiality agreement . On the one hand, if you bind an employee to sign this agreement, it does not give one hundred percent guarantee that information will not leak through any of the multiple channels of information leakage. In addition, a non-disclosure agreement and a non-competition agreement still differ in subject and purpose, although they protect the interests of the employer. On the other hand, an agreement on non-disclosure of confidential information is recognized to be quite an effective tool in the law of the Russian Federation, if properly used as an element of protecting commercial secrets. Pavel Mishchenko, the article “When the NDA is Useless,” and Mikhail Emelyannikov, the statement “Is it possible to protect secrets in a Russian court,” tell in more detail how to do this.
• application of the conflict principle "law of the place of work". In this case, you need to pay attention to the legislation in accordance with which you work. If the company employs employees from other countries, but the company operates in the territory of the Russian Federation, then, according to article 11 of the Labor Code of the Russian Federation, the norms of Russian labor law apply. If the company is operating outside the territory of the Russian Federation, in this case, the laws of the country in which the activity is conducted are applied. Non-competition agreement is concluded in many countries. The question is what restrictions and obligations it imposes on both parties in accordance with the legislation to which the NCA complies. We are talking about the duration of the restrictions, the bonuses and the amount of compensation, and other factors that we mentioned above.
• Federal Law of 26.07.2006 No. 135- “On Protection of Competition”. The law prohibits unfair competition that violates the requirements of honesty, reasonableness and justice.

Foreign experience in applying non-competition agreements

As already mentioned, if a company is registered not in the territory of the Russian Federation, the laws of the country where it is registered take effect. In this case, the head of the company has the opportunity to apply an agreement on non-competition in order to protect the interests of their business. And here it is necessary to take into account the peculiarities of using agreements on non-competition in a particular country or even a state, if we are talking about the United States.

Consider a few examples.

English law is considered a model in this matter. Even labor law in the USA in matters of non-competition does not protect employers so much, despite the fact that the level of judicial protection in the United States is quite high.

In the UK, employees sign several non-competition agreements, or, as they are called, reservations or obligations:

• non-dealing covenant obligation ;
• non-competition agreement ;
• non-solicitation agreement ;
• agreement on suspension from work before leaving with salary (garden leave) . According to the last agreement, the employee receives a salary during the year. Its size is at least 1/3 of the average earnings for the last year. But he does not have the right to hold a similar position or become a direct competitor to the former employer.

In Canada, employers offer employees to sign a non-competition agreement and a non-solicitation agreement . Both agreements clearly spell out the terms, the scope of activities within which it is forbidden to compete, and the territory covered by the agreements. However, Article 2029 of the Quebec Civil Code states that an employer cannot take advantage of a clause on the prohibition of competition if he terminated an employment contract with an employee without a serious reason or if he himself gave the employee such an excuse to terminate the contract.

In countries such as Italy, Spain, Germany, France and the Netherlands, the non-competition agreement provides for the payment of substantial compensation to the employee. Moreover, the amount of compensation depends on the duration of the agreement and on the limitations that are stated in it.

In the US, most states have legalized the non-competition agreement, although in states such as California, Montana, North Dakota and Oklahoma, Hawaii, it is prohibited in whole or in part.

In Florida, the agreement on non-competition - a very common phenomenon. But his requirements must be clearly spelled out and should be aimed at protecting the grounded interests of the company, that is, be reasonable. It is impossible to blame an employee for violating the terms of the agreement if he has worked for the company for only 2 or 3 months.

There are also a number of circumstances in the United States that may invalidate an already signed agreement on non-competition of legal force in whole or in part:

• the employee was fired or he quit himself because the employer inclined him to illegal activities, and he refused to comply with this requirement;
• the employer violated one or more of the conditions of the employment contract;
• the employer did not inform the employee in advance that he would sign an agreement on non-competition, and the employee learned about this only after he left his previous job;
• The employee lives in a state in which this agreement is prohibited by law in whole or in part, but he was forced to sign a non-competition agreement while working for a company located in another state.

In conclusion, we can come to the following conclusion. Despite the absence in the Russian legislation of such a thing as a “non-competition agreement,” company managers have a chance to protect their business from unscrupulous employees.

If the company is registered in Russia, you can use a confidentiality agreement as part of protecting a trade secret. At the same time, it is necessary to introduce a trade secret regime in the company, approve the “Company’s trade secret position” and clearly state what responsibility the employee will bear for its violation.

The legislation of the Russian Federation also provides for the Federal Law “On the Protection of Competition”. Some lawyers believe that it can be applied in the contract, but they forgot to tell exactly how, and we did not find specific wording. If you know how, share in the comments.

If there is an opportunity to use the principle of "law of work" and choose legislation that will regulate and protect the company's activities, it is better to give preference to foreign, in particular, English law. Alternatively, you can pay more attention to employees and provide them with the opportunity for professional growth with adequate compensation. It is likely that this will help reduce the risk of leaving valuable personnel from the company.

But it is not exactly ;-)

Peace and prosperity to your business.

PS I forgot to attach the bibliography , suddenly someone wants to also plunge into the question.