What types of covenants are recognized in Spain?
Noncompete agreements are allowed in employment agreement; however, they have limited enforceability.
Employers and employees can agree to nonsolicitation agreements, and these are generally considered to be a form of noncompete and thus have limited enforceability. Please reach out to Velocity Global through your normal process, and we will help you with these.
IP protection agreements are generally not common in employment agreements as IP rights relating to employee creations belong immediately to an employer by law. However, a clause regarding IP rights is included in our template agreements in Spain.
A confidentiality clause is included in our template agreements in Spain.
It is also possible to enter into permanency and full dedication (exclusivity) agreements. Both of these can be enforced while the employment relationship is in existence. Supported employees must be appropriately remunerated for agreeing to enter into these covenants.
Do our supported employees need to be compensated in return for restrictive covenants?
Yes, but enforceability can still be limited and it only covers Velocity Global. Spanish laws only indicate that the compensation has to be “fair,” and although there is no accurate case law in this respect, a remuneration equivalent to less than 40% of the employee’s annual salary is considered insufficient and renders the clause null and void. The amount deemed fair will also vary depending on the duration and scope of the obligation.
Exclusivity. In order to ensure that a supported employee only renders services for Velocity Global, it would be necessary to include an exclusivity clause in the employment agreement. The exclusivity obligation has to be specifically remunerated to be enforceable. Exclusivity is only applicable during the term of the employment relationship.
We can include 10% of the supported employee’s gross fixed annual salary as compensation for the exclusivity. The compensation for exclusivity must appear as an independent item in the supported employee’s monthly payslip receipt. Please note that this 10% would have already been included as part of the supported employee’s annual gross salary, and it would be enough to ensure the enforceability of the exclusivity clause.