Validity Requirements for a Non-Compete Agreement in Turkey (TBK Articles 444-447)

A non-compete obligation is an undertaking by an employee or partner not to work in, or engage in, a competing business for a defined period and territory after the contract ends; the validity of this undertaking is limited by the requirement not to unfairly jeopardise that person's economic future.

Form and Capacity Requirements

Under Article 444 of Turkish Code of Obligations No. 6098 (TBK), an employee with legal capacity may, in writing, undertake toward the employer to refrain from competing with them in any way after the employment relationship ends; a non-compete agreement that does not comply with the written form requirement is invalid.

Substantive Validity Requirements

For a non-compete obligation to be valid, the employee must have gained knowledge of the employer's customer base, production secrets, or business activities during the employment relationship, and there must be a real risk of significant harm to the employer if this information is used; if either of these two conditions is absent, the non-compete obligation is void.

Limitations on Time, Place, and Subject Matter

Under Article 445 of the TBK, a non-compete obligation must be limited in time, place, and subject matter so as not to unfairly and excessively jeopardise the employee's economic future; where the limitations exceed this measure, the judge may, assessing all the circumstances, narrow the scope or duration of the restriction of their own motion.

The Two-Year Maximum Term

Under Article 445 of the TBK, except in exceptional cases, the duration of a non-compete obligation cannot exceed two years; contract provisions exceeding this period are reduced to two years by the judge.

Termination of the Non-Compete Obligation

The non-compete obligation ends where the employer terminates the contract without just cause, or where the employee terminates the contract for a just cause attributable to the employer; in this case, since the employer is responsible for the end of the employment relationship, the employee cannot remain bound by the non-compete obligation.

Penalty Clauses and Damages

A non-compete agreement may provide for a penalty clause payable in the event of breach; however, the amount of this penalty is also subject to judicial review for excessiveness and may be reduced taking into account the employee's economic circumstances.

Practical Recommendations

When drafting a non-compete agreement, define the duration, geographic territory, and scope in concrete and proportionate terms; if you are the employee, assess with a lawyer whether the agreement you signed complies with these limits.

This article is for informational purposes only and does not constitute legal advice. Please contact our team regarding your specific situation.