4 ms·

> In Europe, and in some states in the US, employment restrictions after job termination are illegal This is unfortunately not true, at the very least in Spain

by Jare 6y ago

> In Europe, and in some states in the US, employment restrictions after job termination are illegal This is unfortunately not true, at the very least in Spain and the UK (that I know of) they are legal - although more regulated in written and in practice (to certain extents) than the Wild West that seems to be most of the US.

realusername 6y ago
In France, non-compete need to be both reasonable (not to broad) and paid extra on top of the salary when you quit the job. If there's no monetary compensation for the non-compete, they are just invalid. I find this position reasonable, non-competes are an extra burden on the employee so they should be paid for.
- sgc 6y ago
  Can they just pay 1 Euro or is there a set formula?
  - joyj2nd 6y ago
    In nearly all countries any contract must be at "arms length". Otherwise you could do fancy things, for example regarding taxes. :-) This is actually a reason why you can not, for example, enforce something that is given freely. E.g. I give you a contract where I promise you to give you my house for free. If I change later my mind, in many jurisdictions you could not force me to write over my house since there is not "arms length". It is something for nothing. https://en.wikipedia.org/wiki/Arm%27s_length_principle https://en.wikipedia.org/wiki/Arm%27s_length_principle
    - willcipriano 6y ago
      Similarly, as I understand it In the US most noncompete contracts are actually unenforceable due to the concept of consideration[0]. Every noncompete I've signed offered me nothing of value in exchange for my agreement, they weren't part of the negotiation process and were simply presented with the health insurance and other forms on my first day with a implied "sign this or you don't have a job". However that wouldn't stop someone from calling your new employer and threatening to sue. [0]https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration
      - wikibob 6y ago
        This is incorrect. Non-competes are enforceable, and are enforced, in the majority of US states.
        willcipriano 6y ago
        We may be talking about different things. Executives often negotiate a contract that contains a noncompete. That noncompete has clear consideration as it was negotiated as part of a total deal of employment, theoretically the employee is more highly compensated for this term of the contract. However rank and file employees are often not presented with the noncompete contract until their first day of work after salary negotiations have already taken place and the position accepted. Such an agreement probably isn't enforceable[0] as far as I can read[1] as it's hard to argue its part of the employment contract as the contract is signed after you are already employed and have reported for your first day of work[2]. If it was a employment contract it would've came attached to the offer letter. [0]"Performance of existing duties is not good consideration" - https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration [1]"The very basic requirements are that the non-compete must (1) be in writing; (2) be part of an employment contract; (3) be based on valuable consideration; (4) be reasonable in scope of time and of territory; (5) not be against public policy." - https://lincolnderr.com/is-my-non-compete-enforceable/ https://lincolnderr.com/is-my-non-compete-enforceable/ [2]”One of the most common reasons that courts refuse to enforce Non-Competes is that employers make the mistake of obtaining the agreement from an already-hired employee without providing the employee with anything of value in return. Generally, such agreements are unenforceable because the employee did not receive any additional “consideration.”" - https://macelree.com/the-top-10-mistakes-with-non-competition-agreements/ https://macelree.com/the-top-10-mistakes-with-non-competitio...
        joyj2nd 6y ago
        IANAL. But, for example, in some jurisdictions you can write in the contract that all over time is already compensated with your salary. As long as the salary is significantly above market pay there won't be any issues. If you pay market rate and the employee is regularly pulling 60h work weeks, you are setting yourself up for big liability issues.
  - Seb-C 6y ago
    No, they have to pay your full salary for the whole time. So to enforce a 18 month non-compete agreement they have to compensate you with 18 months of salary.
    - paulgb 6y ago
      It's worth noting that this is usually a significant pay cut from the usual total comp, since annual bonuses in some areas of finance tend to be >50% of total comp.
      - ghaff 6y ago
        Gardening leave payments are better than nothing if only because they force a company to put some skin in the game if they actually care about enforcing the contract. But, in many cases (I believe the newish Massachusetts law for example) it's not 100% and, as you say, even if it is 100%, it's often exclusive of bonuses, even when bonuses are pretty much a normal expected part of comp and RSUs. Plus it's maybe an 18 month pause on someone's career. Sure, for some people, 18 months off at half pay or so might seem like a pretty sweet deal. It certainly isn't for everyone.
- Jare 6y ago
  In Spain it also needs a reasonable compensation, AFAIK estimates are around 80% of the salary the employee would have received during the period the post-employment limitation lasts. It can be paid "while you are employed", which becomes a notable point of friction in contracts where part of your negotiated gross salary suddenly appears assigned for that purpose instead. Things may get funny because at termination the company may have in fact paid only a part of the compensation that the agreed period would require. What happens then? Is the period reduced proportionally? Is the non-compete voided entirely? Moreover, the contract is binding both ways, which means at termination the employee might require the employer to honor their side and pay for the entire period regardless if the employer never intended to enforce it. Most of those quirks have not been tested to my knowledge, but it would be fun to watch.
xnyan 6y ago
Please correct me but my understanding is that in essence it’s sort of like the US. There are legally defined reasons you can’t be fired but there are plenty of reasons you can and if they want to fire you, a legal reason can be found without too much trouble. You can still sue for wrongful termination but the total amount you are able to recover is limited to 1 month salary for each year worked at the firm?
joyj2nd 6y ago
"the Wild West that seems to be most of the US. " You can write anything you want into a contract. Even that you are obligated to give BJs until the end of your life to your previous employer. Good luck trying to enforce this in court. A shitty non compete? I would tell my previous employer "go sue me". A friend actually had this problem and he met with his previous employer and told them: "Look, I don't care what you want, I will keep working for my new employer. If you don't like that you can pay me the same amount of money and I sit a home and do nothing." They passed.
- anonymousab 6y ago
  > Good luck trying to enforce this in court The enforcement is them dragging it out in court for as long as it takes to bankrupt you. Amazon has a large vested interest in retaining these clauses and wielding them as a weapon. To the extent that only a few upper employees may have the resources to fight back long enough to avoid being destroyed.
  - joyj2nd 6y ago
    You have a point there but don't forget, suing works both ways. And while the company may assume they can sue you into bankruptcy, lawyer could assume the opposite. If they counter-sue, a big company is able to pay damages. As with most things in live, they work both ways.
    - james-mcelwain 6y ago
      I seriously doubt there are many lawyers willing to sue Amazon on contingency unless it's the most slam dunk of cases.
      - joyj2nd 6y ago
        Lawyers love to sue big companies. Do you know why? Payment is guaranteed if they win. And if company XYZ insists on an unreasonable non-compete without compensations, then this screams class action. https://www.mahanyertl.com https://www.mahanyertl.com
toyg 6y ago
It's legal to put clauses in contracts, but employment tribunals almost invariably strike them down. Unless something clearly nefarious is going on, they are utterly unenforceable.
- Jare 6y ago
  IANAL but this looks to me (sorry, in Spanish) like an example of one that was enforced without anything particularly nefarious, and included the employee having to return the compensation and pay an additional amount for damages on top of that. https://cdn.cuestioneslaborales.es/wp-content/uploads/2014/12/indemnizaci%C3%B3n-pacto-no-competencia.pdf https://cdn.cuestioneslaborales.es/wp-content/uploads/2014/1...
  - toyg 6y ago
    It varies country by country. The major ones tend to side with workers - unless the contract explicitly compensates for the clause: https://www.internationallaborlaw.com/files/2012/10/Drafting-and-Enforcing-non-compete-agreements-in-the-EU.pdf https://www.internationallaborlaw.com/files/2012/10/Drafting... I don’t know what your Spanish dude did. Most of the generic cut-and-paste clauses you find around are utterly unenforceable.
bloak 6y ago
I've heard that law firms in England put terms in employment contracts that prevent an employee from working for another law firm for 12(?) months within 10(?) miles. They're called "restrictive covenants", I believe. Since law firms often have multiple offices, a common trick is to be officially employed at a far-away office while mostly working at home and sometimes "visiting" the nearby office. For the first 12 months. Mentioning that the reason you left might have been because you were being sexually harassed probably deflects some threats, but these things rarely get as far as a public court so it's anyone's guess what gets mentioned in private in such cases. I have absolutely no idea how the damages would be calculated if enforcement of a restrictive covenant did get as far as a court. It's certainly an interesting question. Perhaps for an ensurer if people need to ensure against it.

by Jare 6y ago

realusername 6y ago

In France, non-compete need to be both reasonable (not to broad) and paid extra on top of the salary when you quit the job. If there's no monetary compensation for the non-compete, they are just invalid. I find this position reasonable, non-competes are an extra burden on the employee so they should be paid for.

sgc 6y ago
Can they just pay 1 Euro or is there a set formula?
- joyj2nd 6y ago
  In nearly all countries any contract must be at "arms length". Otherwise you could do fancy things, for example regarding taxes. :-) This is actually a reason why you can not, for example, enforce something that is given freely. E.g. I give you a contract where I promise you to give you my house for free. If I change later my mind, in many jurisdictions you could not force me to write over my house since there is not "arms length". It is something for nothing. https://en.wikipedia.org/wiki/Arm%27s_length_principle https://en.wikipedia.org/wiki/Arm%27s_length_principle
  - willcipriano 6y ago
    Similarly, as I understand it In the US most noncompete contracts are actually unenforceable due to the concept of consideration[0]. Every noncompete I've signed offered me nothing of value in exchange for my agreement, they weren't part of the negotiation process and were simply presented with the health insurance and other forms on my first day with a implied "sign this or you don't have a job". However that wouldn't stop someone from calling your new employer and threatening to sue. [0]https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration
    - wikibob 6y ago
      This is incorrect. Non-competes are enforceable, and are enforced, in the majority of US states.
      - willcipriano 6y ago
        We may be talking about different things. Executives often negotiate a contract that contains a noncompete. That noncompete has clear consideration as it was negotiated as part of a total deal of employment, theoretically the employee is more highly compensated for this term of the contract. However rank and file employees are often not presented with the noncompete contract until their first day of work after salary negotiations have already taken place and the position accepted. Such an agreement probably isn't enforceable[0] as far as I can read[1] as it's hard to argue its part of the employment contract as the contract is signed after you are already employed and have reported for your first day of work[2]. If it was a employment contract it would've came attached to the offer letter. [0]"Performance of existing duties is not good consideration" - https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration [1]"The very basic requirements are that the non-compete must (1) be in writing; (2) be part of an employment contract; (3) be based on valuable consideration; (4) be reasonable in scope of time and of territory; (5) not be against public policy." - https://lincolnderr.com/is-my-non-compete-enforceable/ https://lincolnderr.com/is-my-non-compete-enforceable/ [2]”One of the most common reasons that courts refuse to enforce Non-Competes is that employers make the mistake of obtaining the agreement from an already-hired employee without providing the employee with anything of value in return. Generally, such agreements are unenforceable because the employee did not receive any additional “consideration.”" - https://macelree.com/the-top-10-mistakes-with-non-competition-agreements/ https://macelree.com/the-top-10-mistakes-with-non-competitio...
      - joyj2nd 6y ago
        IANAL. But, for example, in some jurisdictions you can write in the contract that all over time is already compensated with your salary. As long as the salary is significantly above market pay there won't be any issues. If you pay market rate and the employee is regularly pulling 60h work weeks, you are setting yourself up for big liability issues.
- Seb-C 6y ago
  No, they have to pay your full salary for the whole time. So to enforce a 18 month non-compete agreement they have to compensate you with 18 months of salary.
  - paulgb 6y ago
    It's worth noting that this is usually a significant pay cut from the usual total comp, since annual bonuses in some areas of finance tend to be >50% of total comp.
    - ghaff 6y ago
      Gardening leave payments are better than nothing if only because they force a company to put some skin in the game if they actually care about enforcing the contract. But, in many cases (I believe the newish Massachusetts law for example) it's not 100% and, as you say, even if it is 100%, it's often exclusive of bonuses, even when bonuses are pretty much a normal expected part of comp and RSUs. Plus it's maybe an 18 month pause on someone's career. Sure, for some people, 18 months off at half pay or so might seem like a pretty sweet deal. It certainly isn't for everyone.
Jare 6y ago
In Spain it also needs a reasonable compensation, AFAIK estimates are around 80% of the salary the employee would have received during the period the post-employment limitation lasts. It can be paid "while you are employed", which becomes a notable point of friction in contracts where part of your negotiated gross salary suddenly appears assigned for that purpose instead. Things may get funny because at termination the company may have in fact paid only a part of the compensation that the agreed period would require. What happens then? Is the period reduced proportionally? Is the non-compete voided entirely? Moreover, the contract is binding both ways, which means at termination the employee might require the employer to honor their side and pay for the entire period regardless if the employer never intended to enforce it. Most of those quirks have not been tested to my knowledge, but it would be fun to watch.

xnyan 6y ago

Please correct me but my understanding is that in essence it’s sort of like the US. There are legally defined reasons you can’t be fired but there are plenty of reasons you can and if they want to fire you, a legal reason can be found without too much trouble. You can still sue for wrongful termination but the total amount you are able to recover is limited to 1 month salary for each year worked at the firm?

joyj2nd 6y ago

"the Wild West that seems to be most of the US. " You can write anything you want into a contract. Even that you are obligated to give BJs until the end of your life to your previous employer. Good luck trying to enforce this in court. A shitty non compete? I would tell my previous employer "go sue me". A friend actually had this problem and he met with his previous employer and told them: "Look, I don't care what you want, I will keep working for my new employer. If you don't like that you can pay me the same amount of money and I sit a home and do nothing." They passed.

anonymousab 6y ago
> Good luck trying to enforce this in court The enforcement is them dragging it out in court for as long as it takes to bankrupt you. Amazon has a large vested interest in retaining these clauses and wielding them as a weapon. To the extent that only a few upper employees may have the resources to fight back long enough to avoid being destroyed.
- joyj2nd 6y ago
  You have a point there but don't forget, suing works both ways. And while the company may assume they can sue you into bankruptcy, lawyer could assume the opposite. If they counter-sue, a big company is able to pay damages. As with most things in live, they work both ways.
  - james-mcelwain 6y ago
    I seriously doubt there are many lawyers willing to sue Amazon on contingency unless it's the most slam dunk of cases.
    - joyj2nd 6y ago
      Lawyers love to sue big companies. Do you know why? Payment is guaranteed if they win. And if company XYZ insists on an unreasonable non-compete without compensations, then this screams class action. https://www.mahanyertl.com https://www.mahanyertl.com

toyg 6y ago

It's legal to put clauses in contracts, but employment tribunals almost invariably strike them down. Unless something clearly nefarious is going on, they are utterly unenforceable.

Jare 6y ago
IANAL but this looks to me (sorry, in Spanish) like an example of one that was enforced without anything particularly nefarious, and included the employee having to return the compensation and pay an additional amount for damages on top of that. https://cdn.cuestioneslaborales.es/wp-content/uploads/2014/12/indemnizaci%C3%B3n-pacto-no-competencia.pdf https://cdn.cuestioneslaborales.es/wp-content/uploads/2014/1...
- toyg 6y ago
  It varies country by country. The major ones tend to side with workers - unless the contract explicitly compensates for the clause: https://www.internationallaborlaw.com/files/2012/10/Drafting-and-Enforcing-non-compete-agreements-in-the-EU.pdf https://www.internationallaborlaw.com/files/2012/10/Drafting... I don’t know what your Spanish dude did. Most of the generic cut-and-paste clauses you find around are utterly unenforceable.

bloak 6y ago

I've heard that law firms in England put terms in employment contracts that prevent an employee from working for another law firm for 12(?) months within 10(?) miles. They're called "restrictive covenants", I believe. Since law firms often have multiple offices, a common trick is to be officially employed at a far-away office while mostly working at home and sometimes "visiting" the nearby office. For the first 12 months. Mentioning that the reason you left might have been because you were being sexually harassed probably deflects some threats, but these things rarely get as far as a public court so it's anyone's guess what gets mentioned in private in such cases. I have absolutely no idea how the damages would be calculated if enforcement of a restrictive covenant did get as far as a court. It's certainly an interesting question. Perhaps for an ensurer if people need to ensure against it.