What is a non-compete clause?

This represents a written agreement between the company and the employee, by which the latter undertakes not to undertake acts or acts of competition with the company, after the termination of the employment contract with the company. The non-competition clause is regulated in terms of labor relations by the Labor Code.

In general, the basic purpose of this regulation is a means of protection. The intention of the law is to protect the person who discloses sensitive information to another person with whom he is in a subordinate relationship and finally to ensure a relational balance, both in work or business relationships, as well as in relation to the employee who assume an additional obligation by accepting the responsibility of the job.

Establishing such a clause is important for companies when the employee occupies a key position in the company’s structure and, in light of this fact, has access to sensitive, confidential information of the company that would allow him to compete in the business of the former employer in the future, speculating on the information obtained as an employee. Such a clause is also important when the employer’s business is based on the practice of a trade or profession by the employee who, having access to the employer’s sensitive information (for example: database of clients, suppliers, pricing policy, strategies of sales, etc.), can develop a similar business having the advantage of the information obtained as an employee of the company.

When can the non-competition clause be concluded?

The non-competition clause can be negotiated and signed both at the conclusion of the employment contract and during its execution.

The non-competition clause requires the employee, after the termination of the contract, not to provide, in his own interest or that of a third party, an activity that is in competition with that provided at his employer, in exchange for a monthly non-competition allowance that the employer undertakes to pay throughout the non-competition period.

What does the non-compete clause contain?

The non-competition clause produces its effects only if the following are specifically provided for in the individual employment contract:

– the activities that are prohibited to the employee on the date of termination of the contract,

– the amount of the monthly non-compete allowance,

– the period for which the non-competition clause takes effect,

– third parties in whose favor the performance of the activity is prohibited,

– the geographical area where the employee can be in real competition with the employer.

The monthly non-competition allowance due to the employee is not of a salary nature, it is negotiated and is at least 50% of the average gross salary income of the employee from the last 6 months prior to the date of termination of the individual employment contract or, if the duration of the individual employment contract was less than 6 months, from the average gross monthly salary income due to him during the duration of the contract.

The non-compete allowance represents an expense incurred by the employer, it is deductible when calculating the taxable profit and is taxed to the beneficiary natural person, according to the law.

The non-competition clause can produce its effects for a maximum period of 2 years from the date of termination of the individual employment contract.

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The main management structure of the company in Romania is the general meeting of associates / shareholders. The constitutive act establishes the rules for convening and adopting decisions and whether the exercise of the vote can be delegated by special mandate by the associate / shareholder who cannot take part in the meeting. In the limited liability company, each shareholder entitles the holder to one vote in the respective meeting. The general meeting of associates has the following main obligations: ✓ to approve the annual financial statement and to establish the distribution of the net profit. ✓ to appoint the administrators and the censors, to revoke / dismiss them and to discharge them, as well as to decide to contract the financial audit, when it is not obligatory, according to the law; ✓ to decide the pursuit of the administrators and censors for the damages caused to the company, designating also the person in charge to exercise it; ✓ to modify the constitutive act.
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The limited liability company is the most common form of company in Romania, being the legal entity that best serves the interests of investors both from the point of view of the reliability of the activity, and from the perspective of its management. The limited liability company is abbreviated "SRL" in Romania and is the equivalent of the American limited liability company Limited Liability Company (abbreviated to LLC) or the German economic structure "Gesellschaft mit beschränkter Haftung" (abbreviated to GmbH), or the structure called "limited" , the structure used in most Latin American states.
The limited liability company is characterized by:
✓ the character intuitu personae, which means that this economic structure is based on the trust between the associates;
✓ the division of the share capital into fractions called shares, which cannot be negotiable securities;
✓ the liability of the associates is limited to their contribution to the share capital.
The limited liability company may also have a single partner, natural or legal person, of Romanian or foreign nationality, who will be the owner of all shares. Instead, the maximum number of associates is 50 people.
At present, the Romanian law no longer conditions the subscription and payment of a certain amount as share capital.
Through registration, the company acquires legal personality, becoming, under the law, a collective subject of law. The conclusion given by the judge is sent, ex officio, to the Official Gazette of Romania for publication at the expense of the company and to the Financial Administration in whose territorial area is the main headquarters of the company for fiscal registration, mentioning the registration number in the Trade Register .

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