The labour court stated in a judgment of 7 May 2015 that the general obligations of the employee with regard to competition and trade secrets arise from the application of article 1134 of the Civil Code, which stipulates, in general terms, the execution in good faith of agreements on the one hand and the application of the more specific rule of article 17 3° of the Act of 3 July 1978 on Employment Contracts on the other hand.
For an employee whose employment contract has come to an end, the aforementioned obligations can be summarized as follows:
- If there is no valid non-compete clause between parties, the former employee is allowed to conduct a competitive activity on the condition it is not an act of unfair competition.
- Unfair competition conflicts with fair practices in commercial matters and therefore exceeds the limits of what can be expected from a normal competitor.
- Hence, running a competing business without having a registration number in the Central Database for Enterprises (Kruispuntbank der Ondernemingen / Banque de Carrefour des Entreprises) or valid registration with the VAT administration authority should be considered unfair competition. It allows for the performance of competing activities and the application of prices that cannot be offered by competitors fulfilling their legal obligations.
- The legal obligation of confidentiality as stipulated in article 17 2° of the Act on Employment Contracts cannot prevent the worker from using his experience or specific knowledge acquired during his former employment, unless this knowledge concerns business secrets or confidential information.
- The right to compete includes the right to gain clients from the former employer. Gaining such clients cannot in itself be considered unlawful, unless it involves illegal practices such as using a confidential customer/prospect list, creating confusion or damaging the reputation of the former employer. However, the employee is free to rebuild the former client portfolio, based on publicly available information.
- In the present case, the court ruled that the employer failed to prove that the former employee conducted a commercial activity (beauty treatments) that required the employee to register with the Central Database of Social Security (Kruispuntbank van de Sociale Zekerheid / Banque Carrefour de la Sécurité Sociale) or with the VAT administration authority. Furthermore, the court stated that the employer failed to prove that the employee effectively offered beauty treatments to customers of her former employer. Therefore, the claim of the former employer was rejected.
Besides the aforementioned legal restrictions, an employee can after termination of his employment agreement engage in fair competition with his previous employer, unless he limits his freedom to compete by signing a non-compete clause or restrictive covenant.
Hilde Possemiers (hilde.possemiers@cms-db.com)
Jef Degrauwe (jef.degrauwe@cms-db.com)
