To protect their business interests, employers will usually attempt to include clauses in their contacts of employment which aim to restrict who a former employer can do business with, whether they can establish a business and what information they can use and disclose.
Restraint of trade
Where an employer anticipates competition in their market from a former employee, they can include clauses in the employment agreement which restrain former employees from competing in their market. A former employee may also be prevented from soliciting clients and other employee from their former employer.
Likewise, when a business seeks to acquire a business entity in order to enter a new market, that sale may be subject to a clause restricting the seller’s trade for a period of time.
However under Cyprus law clauses which are considered as unreasonable in preventing competition, solicitation or dealing with customers after the employment ends can be considered void as restraining former employees from exercising a lawful profession contrary to Article 25 of the Cyprus Constitution.
Clauses which restrict former employees from trading must be drafted carefully to ensure that they are reasonable and proportional in in protecting the employer’s business interests and are not contrary to the constitution.
An employer can prevent sensitive business information (trade secrets and private business information) from being disclosed to third parties through a confidentiality clause in the employment agreement or in separate confidentiality and non-disclosure agreements.
A common example is non-disclosure of trade secrets, where a former employee cannot use sensitive business information from their former employer to compete against them.
If the former employee has breached their undertaiking the employer party may seek an injunction and damages. If the threat of disclosure is immediate, a court can award a temporary injunction. Where the former employee profits as a result of utilising trade secrets in breach of the agreement, the employer can also seek to recover damages for any losses incurred.
How can we help?
At Theodorou Law we have over 15 years’ experience in advising and representing national and international companies in employment law matters.
We can provide advice on what interests can be protected by restraint of trade clauses, confidentiality and non-disclosure agreements within the scope of employment relationships.
Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law.
The above should be used as a source of general information only. It is not intended to give a definitive statement of the law.
If you have a query or wish to receive further information, please contact us using [email protected]