NON-COMPETITION CLAUSE IN ROMANIAN LABOUR LAW

Protecting the company’s interests is any employer’s legitimate objective, so as to preserve the company’s advantages in relation to its competitors. Romanian law acknowledges employers’ right to protect themselves in the work relations with their employees, by means of a non-competition clause for employees who hold key positions or who have access to the "company’s secrets" or to "essential information".

However, compared to French law, Romanian law stipulates that the non-competition clause which binds the employee becomes effective after the end of the employee's employment contract and not during its performance.

During the performance of the employment contract, the employee is required to comply with the fidelity clause, which implies his obligation to refrain from any unfair competition with his employer. After the end of the contract, the non-competition clause (which differs from the fidelity clause) may take effect for a maximum period of 2 years.

It should also be noted that the Romanian labour law does not allow an exclusivity clause to be inserted in the employment contract of an employee, given that Romanian law authorizes the cumulus of several employment contracts.

Scope ot the non-competition clause

After termination of the employment contract, the non-competition clause creates obligations for both employees and employers:

On one hand, the employee must not carry out an activity competing with the activity he has exercised with the employer, on his own account or for the account of a third party, and

On the other hand, the employer has to pay to the former employee, throughout the non-competition period, a monthly allowance of at least 50% of the average of the gross salaries obtained by the employee during the six months prior to the termination of the Contract

The payment of this monthly allowance begins on the date when the employment contract is terminated and will take place during the entire period of the non-competition obligation and for a maximum of 2 years.
The clause is not applicable if the termination of the employment contract takes place automatically (for example, if the person retires) or for reasons which are not attributable to the employee (elimination of his/her position, reorganization of the company’s business).

If the employer fails to pay this allowance, the employee is not obliged to comply with the non-competition clause and the employer will not be able to resort to justice to impose compliance thereof.

Validify conditions

The Romanian Labour Code conditions the applicability of the non-competition clause to the enumeration of third parties for which the employee is not entitled to carry out competing activities, and of the geographical areas where the employee is in actual competition with his/her employer. To do so, it is necessary to designate, as precisely as possible and in writing, the companies (competitors) for which the employee will not have the right to work.

As regards other competing companies, which may enter the market after the signature of the employment contract that includes the non-competition clause, the employer can protect itself by introducing a special provision. Pursuant to this provision, the employee is not entitled to carry out competing activities in companies having the same main field of activity as the company which pays the non-competition allowance (for example, this may be done by specifying a list a CAEN codes).

The non-competition clause must not result in the absolute prohibition for the employee to practice his/her trade or profession.

Failure by the employee to comply with the non-competition clause entitles the employer to oblige the employee to reimburse the non-competition allowance paid to the latter, to no longer pay such allowance, and to claim damages.