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Labour Law: Simultaneous Employment and Effect of Non - Competition Clauses in the Private Sector

CATEGORY: EMPLOYMENT

Labour Law: Simultaneous Employment and Effect of Non - Competition Clauses in the Private Sector

The rights and obligations of the employer and employee in Cyprus are regulated by reference to the terms of the respective employment agreement (or such other instrument giving rise to an employment relationship) which are complemented by a series of statutes / legislative instruments setting out, among other things, the fundamental rights of employees and basic obligations of employers. Importantly, beyond the express contractual terms contained in any employment agreement, the employer and the employee are, unless expressly agreed to the contrary, bound by a series of implied terms, the most prominent of which is the implied term of mutual trust and confidence.

In stark contrast to commercial transactions where there is a presumption as to the equality of negotiating strength as between the contracting parties, the employment relationship has long been recognised as an idiosyncratic contractual relationship due to the inequality of bargaining power as between the employer and the employee. Indeed, most employment contracts are usually standard-form contracts drafted by the employer and presented to prospective employees on a take-it-or-leave-it basis ensuring that the employer negotiates from a position of strength.

In this respect, it is not uncommon for an employer to seek to restrict the ability of an employee to pursue or take up employment at a third party (usually a competitor of the employer) either while the employment relationship is in force, or following the termination thereof. As a general rule, where a clause / provision in the employment agreement amounts to or has the effect of a general and unqualified restriction on the ability of the employee to pursue a particular trade or occupation, it will most likely be deemed to be invalid and unenforceable against the employee on grounds that such a clause imposes an excessive restriction on the fundamental right of an employee to freely pursue employment. This general rule appears to apply with equal force in relation to the period while the employment agreement is in force and to the period following its termination, although in both cases it may still be possible, for an employer to restrict the ability of an employee to take up a position of employment at a third party provided certain criteria are satisfied.

Employment by a Third Party While the Employment Relationship is in Force (Simultaneous Employment)

It should be stressed from the outset, that it is not always the case that an employment agreement will contain an express provision dealing with the possibility of employment by a third party. In such cases, it can be said that where the possible employment by a third party does not violate the terms of the main employment agreement, and does not adversely affect the interests of the main employer, then, at least theoretically, there is no impediment to the employee being employed by a third party in addition to his employment by the main employer. This of course, is subject to the proviso that such employment by a third party is not contrary to any law. At the same time however, it must be stressed that any additional employment should not come at the expense of the main employment and in this respect the employee must not place himself in a position where his duty of loyalty towards the main employer would be compromised (as would be the case of being employed by a third party – competitor of the main employer).

To take an example, let us assume, that Janice is employed as a hairdresser at Daisy’s Hair Saloon on a full-time basis. Pursuant to the terms of her employment agreement, her normal hours of work are from 8 a.m. – 6 p.m. from Monday to Friday. A few weeks after the commencement of her employment at Daisy’s Hair Saloon, Janice is offered a part-time job as a waitress at Dino’s Pizzeria where she will only be required to work during the weekends.

Provided Janice’s employment agreement is silent on the matter of simultaneous employment by a third party, Janice would not be precluded from working for Dino subject to the proviso that Daisy’s interests (in her capacity as the main employer) are not adversely affected by Janice agreeing to take up the position of waitress at Dino’s Pizzeria and/or provided that Janice has obtained the express consent of Daisy in her capacity as the ‘main employer’. Furthermore, it can be argued that the nature of business of Dino’s Pizzeria is not such as to be considered competitive to the business of Daisy’s Hair Saloon; at the same time, Janice will only be working during weekends meaning that her employment at Daisy’s will not be affected in any way by reason of her employment at Dino’s. If, on the other hand, Janice was required to work at Dino’s on weekdays from, say 5 p.m. to 11 p.m., then Daisy would be entitled to object to Janice being employed by Dino since this would clearly interfere with Janice’s obligations towards Daisy under the main employment agreement.

Non - Competition Clauses Relating to the Period Following the Termination of the Employment Relationship

Clauses relating to the period following the termination of the employment relationship may be upheld in instances where the restriction imposed on the right of the employee to pursue or carry on a trade or occupation is not excessive. Suppose now that Daisy, weary of the growing popularity of Jean’s Beauty Parlour, a competing business located in close proximity to Daisy’s Hair Saloon, is contemplating the addition of a clause in the employment agreements entered into with any new employees to the effect that following the termination of the employment her employees shall be precluded from taking up employment at any competitor of Daisy’s Hair Saloon. As already touched upon, the generality of the restriction in question will invariably render the clause as invalid and unenforceable because it violates a fundamental right of an employee to seek employment.

Author: MARIOS CHRISTODOULOU

 

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