Post Non-Competition Restrictions Under Turkish Code of Obligations

11 Jun 2014


Even though there is no explicit provision regulated under the Turkish Labor Code regarding the obligation of non-competition for the employees after the expiry of their employment contracts; the Turkish Code of Obligations (“TCO“) regulates certain provisions on this item. According to Article 444 of the TCO; an employee, having the capacity to act, may undertake in writing against his employer not to compete after the expiry of the employment contract in any manner whatsoever, especially through setting up a competitor enterprise for his account, working for another competitor enterprise or apart from that refraining from entering into a relationship with the competitor enterprise in which the employee aims to gain interest in any other kind.

According to the said Article of the TCO; such post non-competition provision may be valid only if the employment relationship provides the employee to acquire information about customer clientele or production secrets or business activities rendered by the employer and in case using this information is at the capacity to cause a significant loss of the employer. On the other hand, such post non-competition provisions should not include restrictions that may jeopardize the economical capacity of the employee in future and the term of such provision should not exceed the time limit of two years after the date of termination of the respective employment contract except special circumstances. It is also worth to mention that the judge is authorized to interfere in the limits of post non-competition terms stipulated within the employment contract.

The employee breaching the non-competition obligation determined under the employment contract may be obliged to pay all losses suffered by the employer as a result of such violation.

If the breach of non-competition provision is connected to a fine and save otherwise provided in the contract, the employee may be released from its obligation in connection with the non-competition prohibition by paying the stipulated amount; however the employee is obliged to correct any loss exceeding this amount.