Does a covenant to restrain trade in a Cyprus employment agreement provide sufficient protection to the employer? – and does it really prohibit an employee from performing his trade?
The answer is:
No protection is afforded – the employee can carry on a trade as the employee wishes
Covenant to restrain trade in Cyprus Contracts Law
Under section 27 of the Contract Law, Cap 149, agreements in restraint of trade are void. Section 2 of the same Law says that the Law shall be interpreted in accordance with the principles of legal interpretation obtaining in England. “Restrain” must be taken in its ordinary accepted meaning which is to hold back, hinder, or prevent a person from some course of action
The law in Cyprus […] renders void any agreement in restraint of trade except in three cases set out in sub-section 2 of section 27
The above case is the only authority I have found in the pool of cases available in Cyprus, and although the UK law might be wider in application it seems that the laws in Cyprus have been drafted in a way that is not in line with the UK law.
Exemptions under Section 27(2)
- A person selling the goodwill of its business may agree with the buyer to be restricted to exercise a similar business within certain geographical limits.
- Partners dissolving a partnership may also restrict certain of them from exercising a similar business within reasonable geographical limits.
- Partners may agree between them, that all or some of them will not exercise a business other than that which is exercised by the partnership.
Article 15.1. – Everyone has the right to engage in work and to pursue a freely chosen or accepted occupation.
Constitution of the Republic of Cyprus
Article 25.1 – Every person has the right to practice any profession or to carry on any occupation, trade or business.
Contracts Law, Chapter 149 of the Laws of the Republic of Cyprus
Section 27(1) – Every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void.
Cyprus Case Law
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For many years he has worked and devoted his skills and efforts towards building a successful career as a leading executive. From humble beginnings, his aim has always been to yield results; with a keen focus to attention to detail and client satisfaction. His experience has always been varied and not specific, at times he preferred it. With that in mind, he has dealt with CySEC on licensing and ongoing regulation, international private equity and credit fund managers, NASDAQ and NYSE listed companies occasional millionaires as well as self-made millionaires. His passion though is difficult transaction work organizing and deploying people for a common goal. Harris enjoys reading and studying the Cyprus law and sharing that information on this website.