Non-Compete Clause

Finance staff po ako ngaun sa isa sa mga "Big 4" Auditing firms, clerical po ang trabaho ko, at hindi ako member ng kahit anong engagement teams, mahigit 1 month plang ako dito at gsto ko na lumipat sa competitor na auditing firm at doon maging auditor, kc ayaw nila ako payagang lumipat sa audit department nitong firm na pinapasukan ko ngaun. pero my nkalagay sa contract ko na "if you decide to leave the firm, you agree not to work in any accounting, management or tax consulting firm for a period of one (1) year from the effectivity date of your resignation. If you violate this provision, you agree to pay the Firm liquidating damages in the amount equivalent to fifty percent (50%) of your most recent annual compensation." enforceable ba ito sken khit na clerical lng ang trabaho ko, mahigit 1 month plang ako at wala nmn akong alam na comfidential information tunkol sa Firm o sa mga clients nito dahil narin sa nature ng trabaho ko. Nagpprocess lng kasi ako ng Out of Pocket expenses na nirereimburse sa mga staff ng firm namin. Tulong naman, kasi balak ko na tlgang lumipat.

i would argue that it is enforceable. however, gauge your company whether they will actually file a case to collect. ask about their history.

paano po mangyayari pag nagcollect cla tapos wala akong pambayad kc wala akong property? ngaun kc may family nako pero nakikitira lng kami sa parents ko at wala akong property, first job ko plang to kakapasa ko plang ng board exam, 21 plang ako. tapos ung kita ko ay sakto lang para sa family ko kaya di kami nakakaipon. anu pong pwedeng gawin ng employer ko kung walang wala tlga ako? Thanks

pwede po ba nla idemanda ung bago kong papasukang company if ever ihire ako ng direct competitor nila?? thanks.

this is a common scenario. i am not a lawyer but i can speak from an experience of my colleague. my colleague is a product manager of a huge telco-industry company and for a couple of years he served in good faith. recently an offer from a direct competitor came and he accepted. his current employer of course tried to prevent him from transferring because of a non-compete clause, and to a direct competitor at that. my friend was not to be denied the good opportunity, he resigned and transferred. at first, his now former company send feelers about chasing him, filing a case or whatever. but my colleague sought advice from lawyers who already handled a similar case. according to the lawyers, there is no record yet that one employee lost a case pertaining to non-compete clause. why? because when you escalate the dispute to the Department of Labor, as a citizen you will be protected by the government. your interest as a civilian, with a right to earn a living, will be the shouting argument. government would rather have you employed and have a means of living, than you to be added up in the growing number of the unemployed. that is why the non-compete clause is just baloney - that is in the case of my colleague. my colleague is currently happy in his new job now, working for the competitor, with better working conditions, much better pay.

i am just relaying an experience. this might not hold true for all.

THANK YOU FOR YOUR REPLY!!! nawala takot ko. haha.. SALAMAT!!

please do not take it as applicable to everyone. every case is different actually. it was just an experience by my collegaue. it's best to consult a lawyer and study everything.

those who advise that no company has won enforcing a non-compete clause should do better research: http://sc.judiciary.gov.ph/jurisprudence/2007/feb2007/163512.htm

if ever professional ako, posible bang marevoke ung license ko pg dinemada nila ako?? Thanks!!

that depends if you are proven to have breached any ethical rules. there has to be a separate complaint at the PRC

read further below. As I understand that the employee position or level plays an important role in the courts desicion.


http://www.cprsbarreview.com/bar-reviewers/non-compete-agreements-and-involuntary-servitude-a-case-of-cause-and-effect-by-atty-manuel-a-quiambaobar-reviewer-in-labor-law.html

Thank God for this site at least it helps people make a good, calculated decisions before hasty actions such as in my case. My dilemma is about the Non Compete clause I signed:

"Likewise, within 24 months from resignation, I shall be prohibited from joining any x company Client or any company engaged in the same line of business, that is, training, staffing, executive placement, and consulting for the contact center industry. This is to protect the integrity of the company and to maintain confidential information and trade secrets within the company. Violation of this provision shall be subject to a liquidated damages of Php 100,000.00 without prejudice to other damages."

I am A director in this company holding a sensitive position next to the VP. Problem is I want to leave the company as I am no longer happy with their practices, work requirements and routine. I am also health challenged and would like to engage in a more stress free environment thus I am considering going into consultancy. An offer came just last week from a company doing similar business (a competitor)---and the offer is really good since they give me a consultant engagement + better pay so to tend to my medical and family needs. Thing is, I am fearful that I will be subjected to legal consequences if I do so. my obvious questions are below:
What would be the extent of the damage?
How is a "competitor" defined---what if the new company that i will be joining in does training as well but more on the e-learning type---can they be considered a competitor
If a business shares the pie with my current employer in terms of sales and profit---are they automatically considered as competitors? Dont u think this is also unfair business and employee practice
2 years seem a long time, isn't this too one sided--does the law provide protection to employees such as myself who are no longer happy with their current employment

Is there a way out? I am no longer happy and need to feed my family and tend to my health as well. Opportunities such as these are hard to come by?

Hope to hear from you. Thanks and god bless

it seems you are catering to bpos? will your new company also focus on the same line of clients?

Yes sir. The new company will focus on BPOs. May lusot po ba dito? I was thinking---since the contract can be taken as verbatim and very employee to employer specific which stresses on me "joining" competitors pwede po ba that I set up my own company na lang and just carry the so called new employers products kasi they are based in the US naman and want to expand here. Kaya ang mangyayari instead of me "joining" a competitor I will "be" the competitor and I feel wala naman yun dun sa non compete contract. Its a crazy idea pero do u think it will work?

btw this the full details of the contract:



In consideration of x company, employing me as Director for Training Development (Program Development and Sales Support) under the Training Dept., I hereby agree that I shall not, except, as authorized by the VP for Operations & the President or other authorized officer of the company as required by my duties, reveal to any person, persons or company any of the trade secrets, secret or confidential operations processes or dealings or any information including those in connection with the Method and System, Courseware and Manual developed by x company which may come to my knowledge during the tenure of my contract with the company and shall keep with complete secrecy all confidential information entrusted to me and shall not use or attempt to use any such information in any manner which may injure or cause loss either directly or indirectly to the company or its business. This restriction shall continue to apply after the termination of this agreement without limit in point of time but shall cease to apply to information or knowledge which may come into the public domain.

Likewise, within 24 months from resignation, I shall be prohibited from joining any x company Client or any company engaged in the same line of business, that is, training, staffing, executive placement, and consulting for the contact center industry. This is to protect the integrity of the company and to maintain confidential information and trade secrets within the company. Violation of this provision shall be subject to a liquidated damages of Php 100,000.00 without prejudice to other damages.


Acknowledged & Accepted:

btw also if I become an Independent Contractor---is that also considered "joining" the competitor?

this is just my opinion, but i believe if you are employed or engaged as a contractor by a competitive company, your former employer will be within their rights to file for damages.

here is the latest case i know about:http://sc.judiciary.gov.ph/jurisprudence/2007/feb2007/163512.htm

pwede po ba that I set up my own company na lang and just carry the so called new employers products kasi they are based in the US naman and want to expand here. Kaya ang mangyayari instead of me "joining" a competitor I will "be" the competitor and I feel wala naman yun dun sa non compete contract. Its a crazy idea pero do u think it will work? in essence i set up my own company and just be the distributor of the products.

pwede po ba that I set up my own company na lang and just carry the so called new employers products kasi they are based in the US naman and want to expand here. Kaya ang mangyayari instead of me "joining" a competitor I will "be" the competitor and I feel wala naman yun dun sa non compete contract. Its a crazy idea pero do u think it will work? in essence i set up my own company and just be the distributor of the products.

This is a wonderful topic.

I have my own concern wherein my former company is threatening me to file a case against me.This is the story.
I worked with my previous company for 5 1/2 years. My last position was sales supervisor for visayas and mindanao. The main business of the company let's name it P is about pallet rental. I was employed 2005.2 years after, the company let me signed a contract with non-compete clause where in i was not even allowed to have a copy.And accordingly it stated there that i should not work to the direct competitor or any other material handling business within 1yr should i leave. On the same manner, the owner of the company P opened a new business into selling of racking as distributor, let me call R.To make the business feasible for them, we are forced to serve 2 companies, all visayas and mindanao personnel only. Im getting my compensation from company M while commission for company R.In short, i became a sub-agent as the owner stressed for company R since company M they call it sub-dealer.Again same owner, 2 companies.
Last January, i was on sick leave for 7days then company M questioned it. They stressed the fact of dishonesty regarding sickness tho i have medical certificate. Other than that, they let the HR and luzon manager talk to me about the matter stating that it should be proper for me to exit gracefully rather than investigating the case of dishonesty that would lead to dismissal.In short, i resigned. I have my clearances and quit claim and my commissions both for company M and R were given. A month after i got a job from Material handling industry selling forklifts, port equipment,warehousing tools as Head-sales&operation for Visayas. There are "turn-keys" project for racking only but not directly distributing it, only if client insists for us to sell it to them especially total warehousing project is concern.My current job require me as consultant as well for warehousing breakthroughs. My current company even outsource the rack to local distributor and other supplier as required by client.
With this, my previous company M is about to file me a case regarding this non-compete clause not to work in any direct competitor tho my current employer now is not a direct competitor of racks.not even into pallet business. They stress that eventho, my current company is still have a participation on racking business.
What do u think about this?i've been serving 2 companies at the same time with my previous job and my main employment with the former job doesnt really have to do with my current company. The owner of my former company spoke to the owner of my current requesting me to release from my job however he refused and he stated that we are not dealing with rackings and that is not part of our product portfolio.As head having a job not only a salesperson but consultant,client normally request the head to carry and provide source of racking to avoid any other suppliers interaction.But the company is not involve with distribution.
Please let me know cos i was totally confuse about this.thank you.

I would like to add that with my previous employer, i was a pioneer employer of their visayas and i pioneered the expansion for mindanao as well.

Additional info, i reported directly to the managing director/owner at previous company and the current the same.

you can't prevent them from filing a case against you, but it seems you have a good defense. i assume they won't be able to produce an employment contract with the racking company. you can also argue that the racking in your current MH company is merely incidental.

Ask your current company whether it is possible that you will not handle any pallet or racking sales.

Seems related to my problem. Don't have reply on my topic.
I signed a contract on a IT consulting company. The company is like an agency. Hiring IT personnel then deploy it in their client.

Non-complete clause stated after resignation I was not allowed to work in company's client, competitor and other vendors of company's client for 1 year. Although the contract is project basis(6 months only)I understand that if ever I have a good performance this will prevent me to be absorb or direct hired by the company's client I'm working on. Also this will limit my benefits to what the consultancy firm offer which is far less from a full time regular worked. There are also clause that to me is deceptive only to keep out the consultancy firm from legal obligation.

Any legal basis that I can use to nullify the contract?

Wala na po ba talagang lusot dito sa clause na ito?


NON-SOLICITATION OF EMPLOYMENT AND CUSTOMERS

During the course of your employment with the Company and for a period of (24) twelve months following termination of employment howsoever arising, you will not, without the prior written consent of the Company, (which will not be unreasonably withheld) whether on your own behalf or on behalf of any other person, firm, company or organization, in any capacity:


a. in competition with the Company, solicit any business from any person, firm, company or organization who or which at any time during the course of your employment was a customer of the Company (or any other company within the Group) and with whom or which you have had personal dealings;

Does this mean I can't even start a business that will compete with them and their products? If I do how much would be the extent of damages---if you notice sa transcript it says there "twelve (24) months" may error sa contract--does this not nullify the contract kasi vague ang verbiage?