Restrictive Covenants in Spain

Definition and Types of Restrictive Covenants

The following restrictive covenants are recognised and may be enforceable under the law:

  • Non-compete clauses;
  • Non-solicitation of customers;
  • Non-solicitation of employees.

Enforcement of Restrictive Covenants—process and remedies

If the employee breaches the agreement, he/she will be obliged to return the amount received for this concept and may be required to pay damages, should the company provide evidence of damage. In case of doubt when determining the amount of compensation to be returned, or refusal from the employee to comply with the agreed payment as compensation, the employer may appeal to a social court or an arbitrator (when specifically agreed) to determine said amounts. Likewise, the employee can make a claim against the employer when the agreed compensation was not paid although the non-compete clause remains in full enforceability.  The clause itself could be declared void if the legal requirements were not met. However, it is also possible to cancel the agreement if both parties agree to it, but it can never be cancelled or waived unilaterally.

Use and Limitations of Garden Leave 

The term during which an employee remains on normal salary and is bound by his/her contract of employment, but at the same time requested by the employer not to attend the office or contact clients or customers, is usually used only on disciplinary procedures while the investigation takes place. The employer cannot, unless expressly referred to in the employment agreement, put the employee under garden leave, as they are not provided for statutorily.  This is the reason why they may only be mutually agreed to within the scope of the employment contract.

Employers often use garden leave during an employee’s notice period to prevent the employee from having further access to customers, clients and staff and to prevent the employee from working for a competitor, but that is usually used in Spain when there is very serious evidence that there has been a gross misconduct from the employee.

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Source: WP L&E Global Knowledge

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