Hacker News Reader

Comment by realusername | Hacker News Reader

In France, non-compete need to be both reasonable (not to broad) and paid extra on top of the salary when you quit the job. If there's no monetary compensation for the non-compete, they are just invalid.

I find this position reasonable, non-competes are an extra burden on the employee so they should be paid for.

View on HN

In Spain it also needs a reasonable compensation, AFAIK estimates are around 80% of the salary the employee would have received during the period the post-employment limitation lasts.

It can be paid "while you are employed", which becomes a notable point of friction in contracts where part of your negotiated gross salary suddenly appears assigned for that purpose instead.

Things may get funny because at termination the company may have in fact paid only a part of the compensation that the agreed period would require. What happens then? Is the period reduced proportionally? Is the non-compete voided entirely? Moreover, the contract is binding both ways, which means at termination the employee might require the employer to honor their side and pay for the entire period regardless if the employer never intended to enforce it. Most of those quirks have not been tested to my knowledge, but it would be fun to watch.

Can they just pay 1 Euro or is there a set formula?

In nearly all countries any contract must be at "arms length". Otherwise you could do fancy things, for example regarding taxes. :-)

This is actually a reason why you can not, for example, enforce something that is given freely. E.g. I give you a contract where I promise you to give you my house for free. If I change later my mind, in many jurisdictions you could not force me to write over my house since there is not "arms length". It is something for nothing.

https://en.wikipedia.org/wiki/Arm%27s_length_principle

Similarly, as I understand it In the US most noncompete contracts are actually unenforceable due to the concept of consideration[0]. Every noncompete I've signed offered me nothing of value in exchange for my agreement, they weren't part of the negotiation process and were simply presented with the health insurance and other forms on my first day with a implied "sign this or you don't have a job". However that wouldn't stop someone from calling your new employer and threatening to sue.

[0]https://en.m.wikipedia.org/wiki/Consideration

This is incorrect. Non-competes are enforceable, and are enforced, in the majority of US states.

We may be talking about different things. Executives often negotiate a contract that contains a noncompete. That noncompete has clear consideration as it was negotiated as part of a total deal of employment, theoretically the employee is more highly compensated for this term of the contract. However rank and file employees are often not presented with the noncompete contract until their first day of work after salary negotiations have already taken place and the position accepted. Such an agreement probably isn't enforceable[0] as far as I can read[1] as it's hard to argue its part of the employment contract as the contract is signed after you are already employed and have reported for your first day of work[2]. If it was a employment contract it would've came attached to the offer letter.

[0]"Performance of existing duties is not good consideration" - https://en.m.wikipedia.org/wiki/Consideration

[1]"The very basic requirements are that the non-compete must (1) be in writing; (2) be part of an employment contract; (3) be based on valuable consideration; (4) be reasonable in scope of time and of territory; (5) not be against public policy." - https://lincolnderr.com/is-my-non-compete-enforceable/

[2]”One of the most common reasons that courts refuse to enforce Non-Competes is that employers make the mistake of obtaining the agreement from an already-hired employee without providing the employee with anything of value in return. Generally, such agreements are unenforceable because the employee did not receive any additional “consideration.”" - https://macelree.com/the-top-10-mistakes-with-non-competitio...

IANAL. But, for example, in some jurisdictions you can write in the contract that all over time is already compensated with your salary. As long as the salary is significantly above market pay there won't be any issues. If you pay market rate and the employee is regularly pulling 60h work weeks, you are setting yourself up for big liability issues.

No, they have to pay your full salary for the whole time. So to enforce a 18 month non-compete agreement they have to compensate you with 18 months of salary.

It's worth noting that this is usually a significant pay cut from the usual total comp, since annual bonuses in some areas of finance tend to be >50% of total comp.

Gardening leave payments are better than nothing if only because they force a company to put some skin in the game if they actually care about enforcing the contract. But, in many cases (I believe the newish Massachusetts law for example) it's not 100% and, as you say, even if it is 100%, it's often exclusive of bonuses, even when bonuses are pretty much a normal expected part of comp and RSUs. Plus it's maybe an 18 month pause on someone's career.

Sure, for some people, 18 months off at half pay or so might seem like a pretty sweet deal. It certainly isn't for everyone.

Reply on news.ycombinator.com