Covenant not to compete in labour law. Are employee and employer equal competitors?
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Abstract
In the article the legal doctrine and the case-law, solving civil cases, related with the contract not to compete, of the Supreme Court of Lithuania (SCL), is assessed in the context of the constitutional right of each human being to choose a job or business freely. The article also discloses the legal nature of the relationship, which occurs in the process of concluding or executing of the contract not to compete, assesses the influence of such contracts for the employee.
It is noted that the case-law of the SCL with respect to the legal gap of the regulation of the covenants not to compete is inconsistent. Two stages of the developing of the case-law of the SCL are distinguished. The first stage – when it was recognised that by the covenants not to compete the social labour relations are regulated. The second stage – when it is recognised that labour laws are not applicable for the regulation of the covenants not to compete, because civil legal relations are forming in the process of concluding or executing these contracts.
It is concluded that in the course of conclusion of the contracts not to compete, which cause the restriction of the constitutional right of each human being freely to choose a job (this right is interpreted by The Constitutional Court of The Republic of Lithuania as a right of each human being to choose a job or business freely), as well as in the causes of executing of these contracts, the labour legal relations are forming. That is why, while regulating covenants not to compete, labour laws should be applied.
The covenants not to compete, which cause the restriction of the constitutional right of each human being to choose a job freely, if such a restriction is not allowed by laws, is forbidden by the Constitution of The Republic of Lithuania. Such kind of restrictions can be established only by Law. Taking this into account it is proposed to supplement the Labour Code of the Republic of Lithuania with the rules concerning the conclusion, execution or termination of these covenants. Summing up the tendencies of the experience of the legal regulation of the contracts not to compete fixed in the laws of foreign countries, proposals de lege ferenda are presented.
It is noted that the case-law of the SCL with respect to the legal gap of the regulation of the covenants not to compete is inconsistent. Two stages of the developing of the case-law of the SCL are distinguished. The first stage – when it was recognised that by the covenants not to compete the social labour relations are regulated. The second stage – when it is recognised that labour laws are not applicable for the regulation of the covenants not to compete, because civil legal relations are forming in the process of concluding or executing these contracts.
It is concluded that in the course of conclusion of the contracts not to compete, which cause the restriction of the constitutional right of each human being freely to choose a job (this right is interpreted by The Constitutional Court of The Republic of Lithuania as a right of each human being to choose a job or business freely), as well as in the causes of executing of these contracts, the labour legal relations are forming. That is why, while regulating covenants not to compete, labour laws should be applied.
The covenants not to compete, which cause the restriction of the constitutional right of each human being to choose a job freely, if such a restriction is not allowed by laws, is forbidden by the Constitution of The Republic of Lithuania. Such kind of restrictions can be established only by Law. Taking this into account it is proposed to supplement the Labour Code of the Republic of Lithuania with the rules concerning the conclusion, execution or termination of these covenants. Summing up the tendencies of the experience of the legal regulation of the contracts not to compete fixed in the laws of foreign countries, proposals de lege ferenda are presented.
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Please see Copyright and Licence Agreement for further details.
