Restrictive Covenants

Enforcing Restrictive Covenants in Foreign Locations

Anytime a company sends an employee on assignment, there are multiple issues to consider when dealing with the host country’s employment and labor laws. One area that may be overlooked is the use of restrictive covenants in the employment contract, which can help protect the employer’s business interests both at home and in a foreign location.

These covenants include clauses that control or prohibit certain actions by an employee during employment or following termination. As most employees will conduct themselves well while employed, restrictive covenants usually only need to be enforced if they quit or are terminated, to prevent them from using the employer’s information or resources illegally.

Restrictive covenants are common in the United States, which tends to favor business interests over labor protections, but less so in other countries. Even in areas where these can only be partially enforced, however, they can help to protect a company. They can also serve as deterrents by clearly articulating a company’s intention to protect confidentiality, trade secrets, intellectual property, and high value employees.

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