Turkish non-compete clauses

Under a new legal procedure, employers in Turkey can enforce non-compete restrictive covenants against former employees.

Although the case law is as yet limited, the core principles are:

• The non-compete obligation must be set out clearly in the employment contract;
• The damage suffered by the employer as a result of the breach of the non-compete clause must be significant and not capable of compensation by monetary damages or covered by a penalty clause in the employment contract;
• The employee’s competitive actions must amount to a breach of the principle of honesty and good faith between employee and employer.

The right to prevent employee competition will only arise in exceptional circumstances when all these principles occur together.

From the perspective of a new employer who takes on an employee in breach of the latter’s non-compete obligations, the new employer could be liable if it: (1) encouraged the employee to breach his/her obligations; (2) knew of the employee’s breach but employed him/her anyway; or (3) continued to employ the person once the new employer became aware of the employee’s breach.

An employer can potentially prevent a former employee from setting up an independent business in competition with the employer if the action breaches the employee’s duty of honesty and good faith to the employer and the harm to the employer’s business is potentially significant.

How the Courts and in particular the Court of Appeal will apply these principles will become clearer over time.

As ever, the starting point for protecting the employer will be a clear non-compete clause in the employment contract.