What should you know about the non-competition clause in Turkey?

non competition clause turkey

What does law say about the non-competition clause in Turkey?

In practice, it may be observed that employees who are in key positions and therefore know the production technology or similar important practices of the workplace or know the customers of the workplace may use these secrets or relations in the new workplace or in the workplaces they establish in their name after the termination of their employment contract, and thus the former employer may suffer damages. Therefore, it may be justified to stipulate such a prohibition of competition after the termination of the employment contract.

Although there is no provision in the Turkish Labour Law, Articles 444 to 447 of the Code of Obligations regulate this issue. Accordingly :

  • Firstly, the non-competition clause in Turkey must be stipulated in writing. The condition of being in writing is a condition of validity. Again, in order for it to be valid, the employee must have the capacity to act, in other words, he must be of legal age and competent and not be restricted.
  • The subject matter of the non-competition clause in Turkey may include the employee’s refraining from competing with the employer in any way after leaving the employment, especially from opening a competing business on his/her own account, working in another competing business, or otherwise entering into a relationship of interest with the competing business.
  • The prohibition of competition must not significantly hinder the economic future of the employee. For this purpose, it must be limited in writing to a certain work, duration and place. However, these limitations should be in accordance with equity and should not adversely affect the economic life and future of the employee. From this point of view, it would be appropriate not to include the borders of the country, except for foreign workers who have spent a significant part of their working life abroad, and to limit the concept of place to the province or region. Article 445 limits the prohibition of competition to a maximum of two years, except for special circumstances and conditions. In a situation where a wide range of fields of activity are specified in the trade registry, it would be appropriate not to cover all fields of activity of the employer company, and to select the works directly related to the main work performed by the employer and the work performed by the employee. At this point, Article 445 has made it possible for the judge to limit the excessive non-competition in terms of scope or duration by freely evaluating all situations and circumstances and taking into account the counter-performance that the employer may have undertaken in an equitable manner.
  • The foreseen conditions are valid only if the service relationship provides the employee with the opportunity to obtain information about the customer environment or production secrets or the employer’s business, and at the same time, if the use of this information would cause significant damage to the co-employer.
  • The non-competition clause in Turkey is invalid if it is stipulated while the employee is a minor. In case of behavior contrary to the non-competition clause determined in this way,
  • The employee shall be liable for all damages of the former employer.
  • If a penal clause is stipulated for the cancellation of the non-competition clause in Turkey, but the damage is more than this amount, this amount will also be paid by the employee. Exorbitant penal clauses should not be determined in this regard.
  • If it is made in writing and the behavior of the employee and the importance of the interest violated or threatened justify it, the prohibition of opposition may also be requested in addition to the damages.

The non-competition shall terminate at the end of the stipulated period, in the event that the work is performed outside the specified work, in the event that the work is performed in a place other than the place restriction, in the event that a penal clause is stipulated, in the event that it is paid, in the event that it is determined that the employer does not have a justified interest in the continuation of the non-competition, in the event that the employment contract is terminated by the employer for an unfair reason, in the event that the employment contract is terminated by the employee for a justified reason.

The obligation to comply with the prohibition of competition will continue to be valid in case of transfer of the workplace. However, in case the new employer changes the field of activity of the workplace, the obligation to comply with the non-competition shall cease to exist. The obligation to comply with the non-compete shall also continue during the temporary labour relationship. At this point, it may be possible to consider the work carried out by the employee depending on the borrowing employer as a violation of the non-competition clause in Turkey.