Cristiane Baraldi
Lawyer at Marcos Martins Advogados
The non-compete clause, also known as quarantine, is a provision inserted into employment contracts with the aim of restricting the actions of the former employee after the employment relationship has ended and, thus, preventing them from using the knowledge acquired during the provision of services (such as: confidential data, privileged information, strategies, techniques) in a way that is detrimental to the interests of the ex-employer (either for the benefit of their own business or for the benefit of a new competing employer), during a certain period of time, in a certain geographical area and in exchange for adequate pecuniary compensation, so as not to generate unfair competition.
The main legal asset that the non-compete clause aims to secure is the employer’s intellectual property (for example: inventions, commercial and industrial secrets, production methods and processes, designs).
However, to the same extent that the non-compete clause protects the employer’s intellectual property, it restricts the employee’s freedom to work, since it prevents them from carrying out a certain activity for a certain time and in a specific place.
Both the right to property and the right to freedom of work are guaranteed in the Federal Constitution itself: the right to property in section XXII of Article 5 and the employee’s right to freedom of work in section XIII of the same Article 5.
Both are part of the immutable core of the Constitution, i.e. they are permanent clauses under the terms of Article 60(4)(IV) of the Constitution and are therefore irrevocable rights for the derived constituent power.
Thus, the non-compete clause inserted in employment contracts causes a collision between two fundamental rights: the employer’s right to property and the employee’s right to freedom of work. And this conflict also involves various other constitutional guarantees.
In addition to the employer’s right to intellectual property, there are the guarantees of: free enterprise, guaranteed in item IV of article 1 of the Federal Constitution (CF) and the head of article 170 of the CF; free competition, provided for in item IV of article 170 of the CF; and private property itself, dealt with in item II of article 170 of the CF.
In addition to the employee’s right to freedom of work, there are the guarantees of: the social value of work, set out in Article 1(IV) of the Federal Constitution; work as a social right capable of providing a dignified existence, under the terms of Article 6 of the Federal Constitution; the valorization of human work, set out in Article 170( caput ) of the Federal Constitution; and the search for full employment, set out in Article 170(VIII) of the Federal Constitution.
To make matters worse, there is no express provision in the law for the inclusion of a non-compete clause in employment contracts, leaving doubts about its legality and validity.
As a result, there is a great deal of discussion as to whether or not this clause can be used in employment contracts regulated by Brazilian law; and whether or not it would be valid in the light of the country’s legal system, bearing in mind that no right is considered to be absolute.
Currently, the majority view of both Brazilian jurisprudence and doctrine is that it is possible to include a non-competition clause in an employment contract, provided that a series of requirements are met.
This understanding is based on the absence of an express legal prohibition in the national legal system. According to item II of article 5 of the Federal Constitution, article 122 of the Civil Code (CC) and article 444 of the Consolidation of Labor Laws (CLT), anything that does not contravene the law, good customs, public order, labor protection provisions, applicable collective agreements and decisions by the competent authorities may be stipulated between the parties.
It also follows the trend of Brazilian law itself, since an analysis of the entire legal system reveals a legal inclination to repudiate the practice of competitive acts by ex-employees that could cause damage to their former employer.
Article 482( c ) and ( g ) of the Labor Code expressly provides for dismissal for just cause if the employee commits an act of competition with the company for which he or she works during the employment contract or violates company secrets.
And article 195 of Law 9.279/96, which regulates obligations and rights relating to industrial property, provides for various situations that are characterized as a crime of unfair competition, and among them, those dealt with in items IX, X and XI involve the employment relationship.
In fact, this understanding is also based on the application of the principle of proportionality, which seeks to preserve the essence of each fundamental right so that one does not materialize to the detriment of the other.
It is also based on the post-contractual liability of the employee and the employer, based on good faith and compliance with the obligations of loyalty, trust, obedience and secrecy that govern business and contractual relations, according to articles 113 and 422 of the CC, applicable by virtue of the sole paragraph of article 8 of the CLT.
Finally, it makes use of the solution adopted by various countries so that the non-compete clause can be inserted into employment contracts and, to this end, applies comparative law, in accordance with the head of article 8 of the CLT.
However, according to this trend, in order for the non-compete clause to be valid, it must be in writing and not prohibit the employee from working, but only from carrying out a specific activity (specified in detail) that implies competition with the former employer.
In addition, the clause must have a fixed term, i.e. it must only be valid for as long as is necessary for the protected information to cease to be “new” (for one party the maximum term is two years under the terms of article 445 of the CLT and for another party five years under the terms of article 1,147 of the CC).
With this in mind, the geographical area in which the clause is valid must be delimited. And this geographical area must be the same as that in which the employer carries out its activities and is therefore subject to competition.
It must also provide for the payment of compensation to the employee for the restriction imposed (for some, this payment is of a salary nature, as they understand it to be remuneration for the time at the disposal of the former employer, and for others, it is of an indemnity nature, as it is compensation for the damage caused as a result of the restriction imposed).
Lastly, this type of clause must serve the social interest, represented by the social function of the company itself and of the employment contract, under the terms of Article 5(XXIII) of the Federal Constitution, Article 170(III) of the Charter and Article 421 of the Civil Code, applicable by virtue of the sole paragraph of Article 8 of the CLT.
To reach the solution offered by this current, therefore, use is made of the rules of hermeneutics, the means of resolving collisions between fundamental rights, the general rules of Brazilian law and a systematic and teleological analysis of the national legal system. In addition, the trend in foreign law is followed without a shadow of a doubt.
For example, those in favor of this trend are Estêvão Mallet[1], Regiane Teresinha de Mello João[2], Sérgio Pinto Martins[3] and Alice Monteiro de Barros[4].
The Superior Labor Court (TST) has already handed down a decision on this subject which illustrates in detail the grounds adopted by the current trend under analysis[5].
There are several other decisions along these lines, not only by the TST[6], but also by the Regional Labor Courts (TRTs)[7].
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[1] MALLET. Estêvão. Non-competition clause in an individual employment contract. Revista Ltr. V. 69 n. 10, October 2005, São Paulo: Ltr, 2005, p. 1.160.
[2] JOÃO, Regiane Teresinha de Mello. Non-competition clause in the employment contract. São Paulo: Saraiva, 2003, p. 95-98.
[3] MARTINS. Sérgio Pinto. Non-competition clause inserted in the employment contract. Revista Síntese trabalhista e previdenciária. Year 23, n. 274, April 2012, São Paulo: Síntese, 2012, p. 55-63.
[4] BARROS, Alice Monteiro. Labor Law Course. 8th ed., São Paulo: Ltr, 2012, p. 203.
[5] TST, case n.: RR 0001948-28.2010.5.02.0007, rapporteur minister: Hugo Carlos Scheuermann, 1st Panel, publication: DEJT 30.05.2014.
[6] TST, case n.: ARR 0002170-52.2010.5.09.0006, rapporteur minister: Cláudio Mascarenhas Brandão, 7th Panel, publication: DEJT 12.05.2017; TST, case n.: RR 0010660-32.2014.5.12.0022, rapporteur minister: Delaíde Miranda Arantes, 2nd Panel, publication: DEJT 08.09.2017.
[7] TRT 1st Region, case n.: RO 0011496-87.2013.5.01.0205, reporting judge: Ângelo Galvão Zamorano, 3rd Panel, publication: DEJT 30.06.2015; TRT 2nd Region, case n.: RO 0001620-18.2012.5.02. 0011, reporting judge: Patricia Therezinha de Toledo, 4th Panel, publication: 30.10.2013; TRT 3rd Region, case n.: RO 0001184-65.2012.5.03.0097, reporting judge: Maria Cecilia Alves Pinto, 4th Panel, publication date: DEJT 30/08/2013, page 147.
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