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EMPLOYEE'S DUTY OF NON-COMPETİTİON
A. DEFINITION
During the continuation of the employment contract between the employee and the employer, the employee's non-compete with the employer is an obligation included in the duty of loyalty. In article 444/1 of the Turkish Code of Obligations No. 6098, the conditions of noncompetition are regulated. Employee, after the expiration of contract, may undertake, in writing, to refrain from in anyway competing toward employer, opening a competitor business on its own account, working for another competitor, or otherwise entering into any other form of interest relationship with the coopetitor. The prohibition of competition can be made as a separate agreement by the parties as well as a record which can be added to the employment contract.
B. FEATURES/CONDITIONS
1. Employee’s capacity to act
A prohibition of competition cannot be decided by employee’s legal representative or with his/her approval.
2. Written Contract
3. Existence of a legitimate interest of the employer worth protecting
3.1. Opportunity to learn about production secrets or employer's business
Production secrets and business relation information which will be the subject of the non-competition agreement must be classified information and confidential. As a natural consequence of this, non-competition agreements made with unskilled and low-level workers are generally invalid.
3.2. Opportunity to obtain information about the customer circle
If the customer circle is provided due to the skill and knowledge of the employee (doctor, lawyer, etc.), the competition agreements made are invalid.
3.3. The probability that the employer will suffer substantial harm
In order for a non-competition to be in question, the actual occurrence of the damage is not necessary, the existence of the possibility is sufficient.
4. Not jeopardizing employee’s economic future
4.1. Limitation of noncompetition in terms of time
Pursuant to article 445 of the Turkish Code of Obligations the noncompetition cannot contain unfair restrictions in terms of place, time and type of work, in a way that will unfairly jeopardize the economic future of the employee, and its duration cannot exceed two years, except for special circumstances and conditions,
The judge, may limit the excessive noncompetition in terms of its scope or duration, by freely evaluating all the situations and conditions and by considering the counter-deed that the employer may have undertaken in an fair manner.
In terms of what is referred to as 'special circumstances and conditions' in the provision, in the doctrine; examples are given, such as the position of the employee in the workplace, for example, being a senior manager, expertise in the workplace, and the employer being a qualified specialist with extensive knowledge of production-related technical business secrets.
4.2. Limitation of noncompetition in terms of location
The scope of the noncompetition in terms of location cannot exceed the boundaries of the employer's field of activity.
4.3. Limitation of noncompetition in terms of subject
The scope of the prohibition should be limited only the work that the employee is doing in the enterprise.
C. DOCTRINE VIEWS
1. It is controversial in the doctrine whether the prohibition can be decided to be valid in the whole of Turkey. Our opinion is that if the activity that is the employer's field of activity is carried out all over Turkey, if the employer has an interest worthy of protection in terms of the employee's position in the workplace the noncompetition can be determined in terms of this geographical area. However, in this case, the prohibition should be determined in a way that does not unfairly limit the economic future of the worker in terms of duration and type of work.
2. In a contract in which it was decided that the prohibition of competition was valid in the provinces included in the Marmara, Aegean and Central Anatolian regions, The Court of Cassation in decision not have found this restriction unlawful and it did not dwell on this issue. In our opinion, the decision of such a prohibition on competition about a employee who spent his/her previous working life in one of these regions may cause economic destruction of employee. In this respect, - should be evaluated separately in each case - it is not legal to decide on a noncompetition agreement for such a wide geographical area. The Supreme Court has stated in precedent that it is not possible to implement noncompete agreements in all of Turkey.
3. It should be stated that, even if the employee has not actually done that job de facto during the time he/she worked at the workplace, if the employee has penetrated the employer’s customer circle or production secrets which is not related to his/her job, a noncompetition may be decided for the job that the employee has not directly performed. In the noncompetition agreement, if the type of the prohibited work is left ambiguous or the boundaries are not clearly drawn, this prohibition of competition in the agreement, as we will examine in the next section, may be deemed invalid or limited by the judge.
4. At this point, one of the important issues to be discussed is in cases where the employer operates throughout Turkey whether the noncompetition prohibition throughout the country determined as valid. The Court of Cassation declared invalid the noncompetition agreement about the employee who hired as an assistant bank inspector, work in banks all over Turkey for two years, on the grounds that there was no limit for the location and the bank. According to the view put forward in the doctrine about the subject and in which we also agree, it is possible to regulate the noncompetition in such a way as to cover the whole country, provided that the employer's activity is valid throughout Turkey, and if the employer has legitimate interests worthy of protection in terms of the employee's position in the workplace. However, in this case, the limitations imposed in terms of duration and type of work should be narrower.
D. COURT OF CASSATION PRECEDENTS
In the following decision, the Court of Cassation upheld a noncompetition prohibition covering the whole of Turkey in a circumstance where the employer agreed to pay a price to the employee in return for accepting the prohibition of competition, in an agreement.
1. "According to the provision in the contract between the parties," an employee cannot work in the specialized matter in within a period of 24 months after the end of the service contract for any reason. This noncompetition restriction covers Turkey where the workplace and its shareholdings are operating in this field of work. In order to comply with this restriction, if the employee cannot find a job during the restriction in force or cannot earn an income equal to the income which earned in the defendant’s workplace; the defendant pays the employee the amount deprived in monthly payments during the restriction period. The annual amount of this amount, including bonuses and other payments determined by law, cannot exceed the total of the employee's most recent annual wage with the increase in precedent. The employer can always waive this right. In this case, the employee cannot benefit from his/her rights in this article. Such payments are in any case to end when the employee turns 65. If the employee violates this restriction, the employer has the right to demand compensation, as there is a violation of the contract.”
2. “Our department has not recognized the validity of the regulations envisaged in terms of non-compete within the borders of Turkey. However, for a foreign employee who has spent most of his working life outside of Turkey, it may be possible to determine the prohibition of competition within the borders of the country. Again, the restriction to the provincial borders or a certain region can be seen on the spot depending on the nature of the work.”