Post-employment Restrictions

1. Concept

“Post-employment restrictions” – refer to limitations imposed on former employees after exiting employment in relation to their next work or business, as well as what they can say about their previous work which may be sensitive or confidential.

a. Purpose of post-employment restrictions

There are several purposes of post-employment restrictions, to wit:

1) To protect trade secrets;

2) To protect confidential and sensitive information;

3) To prevent former employees from using what they learned to directly compete with the previous employer;

4) To prevent former employees from disparaging the previous employer and its employees.

2. Test

For a post-employment restriction to be valid, it has to be reasonable.

The following are the factors to test reasonableness:

1) Whether the covenant protects a legitimate business interest of the employer;

2) Whether the covenant creates an undue burden on the employee;

3) whether the covenant is injurious to the public welfare;

4) Whether the time and territorial limitations contained in the covenant are reasonable; and

5) Whether the restraint is reasonable from the standpoint of public policy. (Rivera v. Solidbank Corporation, G.R. No. 163269, 19 April 2006)

a. Circumstances to be considered

The question of reasonableness of a restraint requires a thorough consideration of surrounding circumstances, including the subject matter of the contract, the purpose to be served, the det...

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