In all cases, you should carefully check the terms of the collective bargaining agreement applicable to your company regarding non-compete clauses.

To be valid under Spanish law, a non-compete clause must fulfill several conditions. Here, we present the main points to remember, as well as recent developments in Spanish case law.

Timing of the Non-Compete Clause

The clause can be included at various times: when the contract is signed, during its execution, or even after the contract has ended. It must be justified by the need to protect the company's interests when the employee's skills could cause harm if used by a competitor.

Since a non-compete clause is not presumed, it must be in writing.

Financial Compensation

The non-compete clause must provide for adequate financial compensation for the employee. If this compensation is not clearly defined, the validity of the clause may be challenged. Case law specifies that this compensation must offset the employee's loss of professional opportunities resulting from the application of the clause.

This compensation is indemnity-based and not salary-based, as it is not intended to remunerate the provision of services (TSJ Madrid 21-4-09). If this compensation is not clearly defined, the validity of the clause could then be challenged, as payment becomes impossible due to this lack of clarity (TS 10-7-91).

Article 21.2.b of the ET specifies that this financial compensation must be "adequate," but neither the legislature nor the courts have clarified what constitutes "adequate."

Limited Duration

The clause cannot exceed two years for technicians and six months for other professional categories. If the clause exceeds this duration, it will be considered null and void (TS, 10-02-2009).

A recent ruling (TSJ Catalonia, 4-10-2018) also clarified that the duration of the clause cannot exceed the duration of the employment contract.

Unilateral Waiver Prohibited

In Spain, an employer cannot unilaterally waive a non-compete clause. Such a waiver can only be made by mutual agreement between the parties or if the circumstances that led to the inclusion of the clause have changed.

Post-contractual non-compete clauses cannot be unilaterally waived by the employer under penalty of invalidity. Case law considers that this creates an imbalance between the parties (TS 22-2-11) and that such a clause cannot be subject to the discretion of only one party.

Indeed, the Spanish Supreme Court (Tribunal Supremo, 258/2019, March 28, 2019) recently confirmed that an employer cannot unilaterally waive a non-compete clause under any circumstances. This concerns the application of a general principle according to which contractual obligations cannot be left solely to the will of one of the parties.

This is a common error we observe in our clients' employment contracts, which translate into Spanish the non-compete clause they apply in France, a clause whose legislation allows the employer to unilaterally waive it after a certain notice period. (Cass, March 21, 2018).

Penalties for non-compliance

If the employee violates the non-compete agreement, the employer may claim reimbursement of any sums paid as non-compete compensation. Furthermore, although it is possible to include a penalty clause, case law regulates its use very restrictively.