Among all post employment restrictive covenants, the only one protected by Brazilian laws is confidentiality: it is a criminal offense to disclose trade secrets and other relevant commercial information obtained as a result of the performance of the services. As a consequence, it has become a market practice to include restrictive covenants - such as non-compete, non-solicitation, non-poaching and additional non-disclosure obligations - in employment contracts (especially for high level employees). Such practice aims at ensuring the adequate protection of sensitive information and legitimate business interests of the company by prohibiting former employees from working to competitors and soliciting employees, customers and suppliers.
However, it turns out that Brazilian labor courts have some restrictions in accepting the enforcement of certain restrictive covenants, especially in relation to non-compete obligations. Brazilian labor judges understand that non-compete obligations may only be enforceable if (i) their extent is geographically limited; (ii) the competitors companies or the relevant market is defined; (iii) the non-compete period does not exceed two years; and (iv) an adequate compensation is paid during the post employment non-compete period (based on the amount of remuneration and the extent of the geographic coverage and definition of competitor).
On its turn, although Brazilian labor courts accept the enforcement of non-solicitation and non-poaching obligations without requiring any compensation, such obligations ends up being easy to be circumvented (and, thus, difficult to be enforced), since employees may voluntary apply for jobs with competitors and customers and suppliers may also procure business with them.
Finally, given the difficulties to enforce confidentiality, non-compete, non-solicitation and non-poaching obligations before courts and the reluctance of Brazilian labor judges to grant injunctive reliefs (based on the constitutional guarantees of free of profession and fair competition), it is always advisable to establish the payment of non-compensatory fines, since at the end of the day, it will always be a matter of losses and damages and companies tend to face difficulties when trying to evidence and quantify them before courts.
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