#CostaRica 🇨🇷 #BDS_Article: Could you send me a “template” employment contract, please?
If you are starting a business, legal labor advice may not be at the top of your priority list or...
When hiring employees, companies have a legitimate expectation—up to a certain extent—that employees will dedicate all their energy and skills to the assigned tasks and refrain from other activities that might distract them from the employer’s objectives.
However, while this expectation may seem reasonable, it is unrealistic to demand absolute exclusivity from the employee, as this could limit their right to work (Article 56 of the Political Constitution). Thus, the main question arises: what valid limitations can an employer impose on employees regarding other remunerated or non-remunerated activities they may wish to undertake?
First, it is important to clarify that expecting total exclusivity is unreasonable. For example, if, aside from being a lawyer, I were an extraordinary pastry chef (unfortunately, that’s not the case), the law firm that has hired me could not restrict my right to work as a chef outside of my assigned working hours, since this activity does not conflict with the legal services offered by my employer.
The employee’s duty is limited to refraining from engaging in activities that compete with the employer’s line of business or collaborating with entities that also compete or carry out activities similar to those of the employer. This obligation, known as the duty of non-compete, derives from the principle of good faith, established in Article 19 of the Labor Code.
On this matter, the Second Chamber of the Supreme Court of Justice has stated that “the non-compete agreement is one manifestation of the general principle of good faith, which prohibits the employee from engaging in other work activities of the same nature as those performed under the employment contract, which may create conflicting interests to the employer’s detriment” (Second Chamber, Ruling No. 2012-000487).
This duty does not require additional compensation for the employee, as it is considered a natural consequence of the employment relationship and the principle of good faith. Additionally, this limitation is not restricted to working hours alone; the objective is to protect the employer from any actions by the employee that may harm the employer by using the company’s proprietary information and resources for such purposes.
It should be noted that the foregoing does not relate to exclusivity agreements or prohibition regime common in certain public sector positions, which is a separate matter requiring distinct analysis.
Finally, it is important to clarify that the duty of non-compete ends with the termination of the employment contract. If the employer wishes to extend this obligation beyond the effective term of the contract, they may do so, provided that an agreement is reached with the employee, in which the employee not only consents to this restriction but also understands its scope, the period for which it applies, and the compensation that the employee will receive in return, as this limits their exercise of the right to work.
In summary, the employer may require that the employee refrain from any additional activities during working hours (whether or not they relate to the company’s line of business) and may also require that the employee refrain from engaging in activities that compete or conflict with the employer’s business. Clearly setting these expectations with employees is crucial to avoid conflicts and misunderstandings.
Francisco Salas Chaves
Founding Partner at BDS Asesores
