Non-compete clauses, confidentiality and changing employers: the limits of a senior employee’s obligations

An offer from a competitor may be the next professional step, yet a short clause in the previous agreement can raise substantial questions: may the role begin, which relationships can continue and what counts as company information? For a senior employee, responsibility, access to information and conduct during employment may matter more than the title on a business card.

Review should begin before the move. Distinguish non-compete, confidentiality and non-solicitation undertakings; employment from the period afterwards; and the use of professional experience from the use of an employer’s protected asset. Neither every signed restriction nor every non-compete clause has the same legal outcome.

The signature begins the enquiry

A non-compete may concern a particular employer, industry, clients or activity. Read its definitions, duration and connection to the proposed role, rather than the heading alone. A broad prohibition on “all competing activity” differs from a focused restriction on information use or work with a defined client group.

In AES v Saar, the Supreme Court explained that restraining competition alone, without a protected legitimate interest, is insufficient. Even where such an interest exists, reasonableness and proportionality are assessed by time, location and activity, considering the employee and public too. That is a substantive enquiry, not automatic approval of a particular duration. Judgment, paragraphs 18–26

Which interest is being protected?

Frumer v Radguard considered trade secrets, investment in special training, specific consideration for the restraint, and duties of good faith and loyalty. These considerations require their context; including the words “specific consideration” in an agreement does not complete the assessment.

Ordinary training during work differs from a special investment connected to an appropriate commitment. High salary alone does not establish a particular payment for a post-termination restraint. Establish what was promised, what was paid and the nature of the undertaking alongside the other circumstances. Frumer v Radguard, paragraphs 15–17

A trade secret requires more than a “confidential” label

The Commercial Torts Law defines a trade secret through the information’s characteristics: business information not public or readily discoverable lawfully, whose secrecy provides a commercial advantage and whose owner takes reasonable protective measures. Not every file, list or datum encountered by an employee is therefore necessarily a trade secret.

Identify the information, its advantage and the measures protecting it. Publicly available names differ from a retained body of business detail, but even a detailed list requires proof. A confidentiality clause does not replace examination of the statutory protection’s conditions. Commercial Torts Law, Sections 5–7

Professional knowledge and personal experience

The Law also distinguishes general professional skills acquired during employment. Employees need not erase their experience when leaving. However, remembering information does not make all confidential information freely usable, and professional competence is not permission to transfer protected data.

A focused review asks whether the issue concerns general skill, public information or specific protected business information. Rather than copying material to “show what I know”, describe the role and concern to an adviser and consider the boundaries beforehand. Confidentiality terms may also raise a separate contractual issue not determined merely by the “trade secret” label.

Duties can exist without a non-compete clause

Protection against trade-secret misappropriation does not depend solely on a non-compete clause. Good faith in employment and duties of loyalty may arise separately from the express undertaking. Conversely, failure to establish a trade secret does not always dispose of a contractual cause of action or conduct during employment.

In Girit, the National Labour Court considered senior employees who exploited a relationship with a key supplier during employment. The restriction concerned that particular relationship rather than a general exclusion from their profession. The judgment highlights trust and actual conduct, without imposing the same restriction on every person holding a management title. Judgment, paragraphs 14–29

An employee who also holds corporate office

Where the employee is also an office-holder under the Companies Law, additional corporate duties may arise concerning conflicts of interest, competition and business opportunities. This is an enquiry additional to employment status. The entire office-holder regime should not be applied to every manager, nor should a title alone be assumed decisive. Companies Law, Sections 1 and 254–255

Client and employee non-solicitation

An undertaking not to approach clients differs from a prohibition on all work for a competitor. An undertaking concerning employees needs separate reading too. Establish what is prohibited: initiating contact, recruitment, entering a relationship or information use; the period concerned; and the connection between the conduct and protected interest.

A client’s independent choice does not, by itself, cancel an employee’s undertaking. Equally, not every contact with a former client or job offer to a colleague necessarily constitutes breach. Examine who initiated contact, what happened, when and how, keeping client and employee restrictions distinct.

Agreements with a commercial component

Where the arrangement also involves the sale of an asset, a right or business activity, identify the employment element and the additional commitments expressly. Establish what was transferred, the consideration and the agreed restriction. Labelling a document a “commercial agreement” does not by itself determine the relationship’s classification or the restriction’s validity; a mixed document also requires examining the protected interest and the commitment’s scope.

Do not infer that every bonus is special consideration for a non-compete undertaking or that every client list is a trade secret. A restriction is examined for a legitimate interest and proportionality; a claimed trade secret is examined against the statutory conditions. Assess the commitments and conduct during and after employment separately, rather than relying on the label given to a payment or document. AES v Saar · Girit

During employment and afterwards: two stages

While employment continues, preparation for a new role must take existing duties into account. Giving notice of resignation should not be assumed to have ended employment already or created a period free of commitments. A paid transition may also leave duties in force, depending on the arrangement and circumstances.

After termination, assess continuing contractual restraints, information protection and the alleged conduct separately. A lengthy clause does not establish that every part will be enforced; expiry of a non-compete does not authorise use of trade secrets. Do not access employer systems without authority, transfer passwords, copy databases or delete material as part of the move.

Warning letters and injunction applications

A dispute can develop quickly around a new role’s starting date. A warning letter is not a judgment, and an injunction application does not prove that the restriction will be upheld. Nevertheless, neither should be ignored: identify the allegation, relief sought, hearing and response deadline, and assess the legal and evidential basis.

Availability and scope of interim relief depend on the cause of action, evidence and applicable procedural tests. A damages claim also differs from an injunction. This article supplies no uniform response period or assurance that a restraint can be prevented; jurisdiction and procedure depend on the parties and causes of action.

Preparing for an orderly transition

Gather the agreement, confidentiality annexes, restraints and any separate consideration arrangement. Describe the proposed role sufficiently for review: responsibility, market activity and its connection to information accessed. Prepare a chronology of notice, termination and commencement without transferring protected material to the new employer.

Early assessment can help determine how to approach the matter and whether a dispute can be addressed, uncertainty reduced or proceedings prepared for. Menahemov Shpigel & Co. can assess suitable advice or representation in the circumstances, without promising that a restraint will be removed or upheld.

For remuneration and documents, read the executive agreements article; for termination dates and departure obligations, see ending senior employment.