Non-competition agreement and permanence in the company

An employment contract does not have to be limited to specifying a specific salary, duration or competence. It may also include many other clauses which, in some cases, are the result of negotiation between the future employee and the company.

Two of the most common ones in this regard are the non-competition and permanence pacts. But what exactly do they entail? We will dedicate this post to explaining them in detail.

What is a non-compete agreement?

Non-competition agreements are always required by the employer. The objective? To prevent the employee, once the contractual relationship has ended, from carrying out any professional activity related to the one he or she has carried out within his or her corporation.

This is particularly common in financial companies or companies involved in the research and development of new technologies, as they work with highly sensitive information on a daily basis. Moreover, it is necessary to equip employees with proprietary knowledge that could give them a competitive advantage over any other company in the sector.

Therefore, although the non-compete agreement is negotiated before the contract is signed, the reality is that it does not come into force until the employment relationship is terminated. In fact, there is a possibility that it may never materialise.

Requirements for a non-competition agreement

However, labour legislation does not give companies and workers the power to negotiate this type of agreement in all circumstances. In order for it to be valid and effective, it is necessary that:

• The worker obtains an additional economic consideration while working for the company that compensates him/her for the subsequent restriction when looking for another job freely.
• The company justifies an industrial or commercial interest.

The non-competition agreement has a maximum duration of six months from the date of termination of the contract. However, there is an exception whereby it may be extended to two years in the case of technical personnel.

Other relevant issues

Although they are not expressed in the law, the doctrine has established certain characteristics of this type of agreement. Firstly, it must always be a bilateral agreement that can never be imposed by the employer. Moreover, once signed, it will apply even if the employee voluntarily terminates the contract during the probationary period.

This is particularly important if the compensation for signing the non-competition agreement has been established in the contract as a termination indemnity. By this we mean that the employee would not lose the right to receive it in any case, not even if he/she decides to leave the company. This is because he would have to comply with it anyway.

Consequences of non-compliance

Failure to comply with the non-competition agreement will result in the employee repaying the consideration received from the employer. The employer also retains the right to sue the former employee for damages.

What is a permanence pact in the company?

The permanence pact has nothing to do with the non-competition pact, although it is true that they are compatible within the same specific case. In this case, what the company and the employee agree on is a minimum period during which the employee will continue to work for the employer. In exchange, he/she will receive certain professional training that will be paid in full by the company.

This pact is often signed when companies hire very young workers who have not yet completed their training, be it university, postgraduate or any other type of training. However, this means that the permanence pact does not come into effect until the employee completes his or her studies.

Requirements of the permanence pact

There are only two requirements under existing legislation and case law. The first is that the employee has received specialised training that has been paid for and/or provided by the company. In this case, the term 'specialised' is very important, as the agreement does not apply if the course is provided in a generalised manner to all employees of the company or to those belonging to the same department. It must therefore be exclusive and personalised.
Furthermore, such training must be related to a specific project and make a quantitative and qualitative contribution to the business.

The other requirement is that the agreement must not be valid for more than two years. No less important is the fact that its signature entails the immediate elimination of the probationary period foreseen in general employment contracts.

Consequences of non-compliance

Failure to comply with the permanence agreement will force the worker to compensate the company by paying amounts equivalent to the training courses received, which must be perfectly justified. The law also reserves the right to the employer to demand compensation for damages if it deems appropriate.

This is all there is to know about permanence agreements in the company and non-competition agreements. We hope we have helped you understand them and decide whether or not you are really interested in signing them in your next contract. For more information, count on the help of our labor lawyers.