This is the English version of a Turkish article. The original, with further detail and linked petition templates, is at Rekabet Yasağı Sözleşmesi: Sınırları ve Geçersizlik Hâlleri.
A non-compete covenant in an employment contract is valid only if three limits are all defined: place, time and subject matter (Article 445 of the Code of Obligations). The period may not as a rule exceed two years. It is also required that the employee had access to the customer base or to production secrets, and that using that information could cause the employer substantial harm.
Employment contracts often contain a clause saying: “the employee may not work for a competitor for two years after leaving.”
Such a clause is not always valid. The Code of Obligations subjects non-compete covenants to strict conditions, and where those conditions are absent the covenant has no effect.
On What Conditions Is a Covenant Valid?
Article 444: an employee with legal capacity may undertake in writing not to compete with the employer after the contract ends — in particular not to set up a competing business on their own account, not to work for a competing business, and not to enter into any other interest in a competing business.
But the second paragraph imposes a critical limit: a non-compete covenant is valid only where the employment relationship gave the employee the opportunity to obtain knowledge of the customer base or of production secrets or of the employer's business, and where the use of that knowledge could cause the employer substantial harm.
Two conditions must therefore both be met:
- the employee had access to the customer base or production secrets
- the use of that knowledge could cause the employer substantial harm
For an employee who does not meet them — a production worker with no access to customer information, for instance — the covenant is invalid.
The Three Limits
Article 445: a non-compete covenant may not contain restrictions of place, time and type of work that unfairly endanger the employee's economic future.
Time. Save in special circumstances, it may not exceed two years.
Place. The geographical scope must be defined. A restriction “throughout Turkey” is disproportionate for most jobs.
Subject matter. The restriction must be limited to the field the employee actually worked in. A ban covering an entire sector is excessive.
The second paragraph gives the judge an important power: a court may cut down an excessive covenant in scope or duration, assessing all the circumstances freely and taking fair account of any consideration the employer has undertaken to give.
In other words, rather than striking a covenant down, the court may narrow it and keep it alive.
| Condition | Explanation |
|---|---|
| Written form | It must be expressly agreed in the contract |
| The employee's legal capacity | They must have capacity when the contract is made |
| Access to the customer base or production secrets | They must actually have had such access |
| Risk of substantial harm | Use of the knowledge must be capable of causing the employer serious harm |
| Limit of place | Confined to a defined geographical area |
| Limit of time | As a rule at most 2 years |
| Limit of subject matter | Confined to a defined type of work |
An excessive covenant is cut down by the court rather than necessarily struck down. And where the employer terminated without just cause, the covenant comes to an end.
What Follows from a Breach?
Article 446: an employee who breaches a non-compete covenant must make good all the loss the employer suffers as a result.
Where the breach is subject to a penalty clause and the contract does not provide otherwise, the employee may discharge the obligation by paying the sum stipulated — but must still make good any loss exceeding it.
Besides the penalty and any further loss, the employer may also require the breach to stop, provided that right was expressly reserved in writing in the contract and the importance of the interests threatened, together with the employee's conduct, justifies it.
Article 182 also applies to the penalty clause: the court reduces a penalty it considers excessive, of its own motion. In practice the high penalties attached to non-compete covenants are regularly reduced this way.
When Does the Covenant End?
Article 447 provides for two important situations:
1. The interest disappears. The covenant ends where it is established that the employer no longer has a genuine interest in maintaining it.
2. How the contract ended. Where the contract was terminated by the employer without just cause, or by the employee for a reason attributable to the employer, the covenant comes to an end.
This second case matters enormously in practice: if the employee was dismissed unfairly, or resigned for just cause because their wages were not paid, the covenant falls away automatically.
An employee facing a non-compete claim should therefore begin with the manner of termination: who terminated, was it justified, and did it rest on a reason attributable to the employer?
How Does It Differ from the Duty of Confidentiality?
A non-compete covenant should not be confused with the duty of confidentiality.
Under Article 396 an employee must keep the employer's production and business secrets while the relationship subsists. After it ends, the duty of confidentiality continues so far as necessary to protect the employer's legitimate interests.
That duty is not subject to the conditions governing non-compete covenants, and it continues even where the covenant is invalid.
Unauthorised use of customer lists, pricing policy or technical information may also, where the conditions are met, fall under the rules on unfair competition (Articles 54 and following of the Commercial Code); misappropriating trade secrets can have a criminal dimension as well.
So a finding that “the non-compete covenant is invalid” does not mean that any use is permitted.
Under Article 447 the covenant ends where the employer terminated without just cause, or the employee terminated for a reason attributable to the employer. Before arguing about place, time and scope, establish who terminated the contract and why — it often disposes of the claim.
Frequently Asked Questions
Is a non-compete clause always valid?
No. It requires written form, access by the employee to the customer base or production secrets, a risk of substantial harm to the employer, and defined limits of place, time and subject matter.
How long can a non-compete last?
As a rule at most two years, save in special circumstances. A court may cut down an excessive covenant in scope or duration.
What if I was dismissed unfairly?
The covenant comes to an end. Under Article 447 it ends where the employer terminated without just cause or the employee terminated for a reason attributable to the employer.
Can the penalty clause be reduced?
Yes. Under Article 182 the court reduces a penalty it considers excessive, of its own motion.
If the covenant is invalid, can I use what I know?
Not freely. The duty of confidentiality under Article 396 continues independently, and misuse of customer lists or technical information may amount to unfair competition.