Generally, a non-compete clause, is purported to limit an employee’s ability to work in the same industry and with competing organizations upon employment termination from the current employer. In Moldova, currently, non-compete provisions in employment agreements would be considered as a limitation of employees’ constitutional right to work, and therefore are prohibited.
According to the authors of this legal initiative, the purpose of the new amendments is to protect the employer’s legitimate business interests, such as trade secrets, business confidential information and established customer connections. Such countries as Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, France, Germany, Greece, India, Ireland, Italy, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States of America successfully apply the provisions of this clause.
Under the respective draft law, the non-compete clause, shall be subjected to certain strict validity requirements. Thus, the term of a non-compete clause shall not exceed 2 years after the termination of the employment with respective employer. Further the employee subject to the non-compete undertaking, shall be entitled to a consideration, paid by former employer in amount of a monthly allowance of not less than 50% of employee’s average wage for the last 6 months worked in this company. Moreover, the non-compete provisions shall address in detail the activities that are forbidden for respective employee after the termination of the employment, third parties the employee is not allowed to work for and the geographical area where the employee is considered to be in real competition with the employer.
Additionally, the draft amendment provides that, in case where the employee does not observe the non-compete undertaking, such employee shall return the respective allowance and compensate the damage so caused to his previous employer.
We will keep you informed if the proposed amendments to the Moldovan Labor Code will be adopted by the Parliament.
