{"id":137302,"date":"2026-04-06T12:02:49","date_gmt":"2026-04-06T12:02:49","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=hot_topics&p=137302"},"modified":"2026-04-07T14:12:13","modified_gmt":"2026-04-07T14:12:13","slug":"evaluation-of-non-compete-agreements-in-terms-of-sustainability-within-the-context-of-turkish-labour-law","status":"publish","type":"hot_topics","link":"https:\/\/my.legal500.com\/guides\/hot-topic\/evaluation-of-non-compete-agreements-in-terms-of-sustainability-within-the-context-of-turkish-labour-law\/","title":{"rendered":"EVALUATION OF NON-COMPETE AGREEMENTS IN TERMS OF SUSTAINABILITY WITHIN THE CONTEXT OF TURKISH LABOUR LAW"},"content":{"rendered":"

1. Introduction<\/span><\/b>\u00a0<\/span><\/h4>\n

In today\u2019s world, where digital and green transformation have taken center stage in the global agenda, labour markets are also rapidly transforming. In particular, while global or corporate companies strive to establish sustainability-focused collaborations with competing companies without violating competition law rules, they also aim to retain qualified workforce within their organizations and prevent employee transfers to competitors. Considering that both interests are legitimate and legally protectable, non-compete regulations come into play, and these regulations play a significant role in terms of labour mobility and the transfer of knowledge.<\/span>\u00a0<\/span><\/p>\n

From the perspective of Turkish law, a non-compete obligation can be defined as an obligation arising from the duty of loyalty between the employee and the employer, ensuring the sustainability and legality of competition in free market environments, and requiring the employee to demonstrate loyalty to the employer in accordance with the principles of good faith. Within the scope of labour law, non-compete obligations should be examined from two perspectives: (i) the non-compete obligation arising from the employment relationship and remaining valid during its continuation, and (ii) the non-compete agreement concluded between the employee and the employer to take effect after the termination of the employment relationship.<\/span>\u00a0<\/span><\/p>\n

The non-compete obligation that remains valid during the continuation of the employment relationship is regulated under Article 396 of the Turkish Code of Obligations (\u201cTCO\u201d) and refers to the employee\u2019s obligation not to compete as a requirement of the duty of care and loyalty. In this case, there is no need for the employer to make any additional arrangement to prevent the employee from engaging in competitive behaviour against the employer during the employment relationship, as this constitutes a statutory manifestation of the non-compete obligation.<\/span>\u00a0<\/span><\/p>\n

The continuation of the non-compete obligation after the termination of the employment relationship, on the other hand, depends on the existence of a written agreement between the parties to this effect. Such an agreement may be concluded at the time of establishing the employment relationship or during its continuation by incorporating it into the employment contract, or it may also be executed as a separate protocol upon the termination of the employment relationship. However, in this study, we will address the validity conditions of non-compete agreements that arise after the termination of the employment relationship, their limitations, and their sustainable effects on labour markets.<\/span>\u00a0<\/span><\/p>\n

2. Validity Conditions of Non-Compete Agreements<\/span><\/b>\u00a0<\/span><\/h4>\n

As stated above, non-compete agreements are contracts concluded between the employee and the employer to take effect after the termination of the employment relationship. In this context, it should be noted that although there is no explicit clarity as to the timing of when such agreements may be concluded, Article 444 of the TCO sets forth certain validity conditions for such agreements. Accordingly, for a non-compete agreement to be valid, (i) it must exist within the framework of a valid employment relationship, (ii) the employee must have legal capacity, (iii) the agreement must be concluded in writing, and (iv) the employer must have a legitimate interest. In other words, a non-compete agreement shall be deemed valid if it is concluded in writing between an employee who has legal capacity\u2014meaning the ability to discern, being of legal age and not under restriction\u2014and the employer within the context of a valid relationship, and if the employer has a legitimate interest in concluding such agreement.<\/span>\u00a0<\/span><\/p>\n

Pursuant to the second paragraph of the relevant article, a non-compete clause shall only be valid if the employment relationship provides the employee with the opportunity to obtain information about the employer\u2019s customer base, production secrets, or the work carried out by the employer, and if the use of such information is likely to cause significant damage to the employer. It should be emphasized that it is not sufficient for the employee merely to know the names of customers; rather, the employee must also be aware of elements such as the quantity and type of products involved in the relationship between the customer and the employer, purchasing periods, pricing, and the customer\u2019s contact details, and must be in a position to use such information for their own economic benefit. Otherwise, the non-compete agreement concluded with the employee will not produce legal consequences.<\/span>\u00a0<\/span><\/p>\n

In addition, in order to assess the validity of a non-compete obligation, it is also necessary to determine how the employment relationship was terminated. If the contract has been terminated by the employee for just cause or by the employer without just cause, the non-compete obligation shall automatically cease to exist in all its effects. In such a case, the employer cannot request the employee to comply with the non-compete obligation and cannot claim any contractual penalty, if stipulated.<\/span>\u00a0<\/span><\/p>\n

3. Limitation of Non-Compete Agreements and the Effects of These Limitations on Sustainability<\/span><\/b><\/h4>\n

In non-compete agreements, the aim is to establish a balance between the employee\u2019s economic freedom and the employer\u2019s legitimate interests. It should be emphasized that the general rule governing non-compete agreements is the principle of \u201cFreedom of Contract.\u201d Accordingly, the parties to the agreement are free to determine its terms and conditions. However, this may give rise to certain conflicts between the \u201cFreedom to Work and Contract\u201d regulated under Article 48 of the Constitution and the employee\u2019s duty of loyalty towards the employer. Through the provisions limiting non-compete obligations, the legislator aims to ensure a balanced resolution of the conflict of interests between the employee\u2019s freedom to work and contract and the employee\u2019s duty of loyalty to the employer, as well as to preserve the sustainable transformation of labour markets.<\/span>\u00a0<\/span><\/p>\n

This balance is achieved through certain limitations imposed on non-compete obligations under the law. These limitations must be clearly and explicitly set out in the relevant agreement. However, it should be noted that a concrete restriction affecting the employee\u2019s economic future is only possible where there exists an indispensable legitimate interest of the employer and a risk of its violation. In other words, it is not possible to regulate a non-compete agreement and its limitations in a manner that would unfairly jeopardize the employee\u2019s economic future. In this regard, Article 445 of the Turkish Code of Obligations explicitly provides that a non-compete obligation cannot include inappropriate limitations in terms of place, time, and type of work that would unfairly endanger the employee\u2019s economic future, and that, except under special circumstances, it cannot exceed two years.<\/span>\u00a0<\/span><\/p>\n

As is known, under the repealed Code of Obligations No. 818, the absence of reasonable limitations in a non-compete agreement would result in the invalidity of such agreement. However, with the new Code of Obligations No. 6098, it has been regulated that such limitations are not, in essence, a condition for validity, and that an agreement lacking these conditions cannot be deemed directly invalid. As a consequence of not being invalid, it is stipulated\u2014pursuant to the second paragraph of the relevant article\u2014that the judge may limit an excessive non-compete obligation in terms of its scope or duration by freely evaluating all circumstances and conditions and by taking into account, in an equitable manner, any consideration undertaken by the employer. Through this regulation, the legislator grants the judge discretionary power in determining the parameters of sustainable competition by eliminating unreasonable restrictions in non-compete obligations through limitation rather than invalidation. Accordingly, when assessing such limitations, the judge will conduct a cumulative evaluation in terms of place, time, and subject matter.<\/span>\u00a0<\/span><\/p>\n

3.1. Limitation in Terms of Duration<\/span><\/b>\u00a0<\/span><\/p>\n

Pursuant to Article 445 of the TCO, the duration of a non-compete obligation cannot exceed two years. Accordingly, the duration of a non-compete obligation must be determined as a maximum of two years in agreements. The duration of the restriction begins upon the termination of the employment relationship, and any lawsuits filed within this period do not affect the running of the duration. The judge evaluates whether the duration stipulated in non-compete agreements is reasonable on a case-by-case basis. Indeed, excessively long and disproportionate non-compete obligations not only restrict the employee\u2019s constitutional right to work but also prevent skilled personnel from utilizing their abilities in different fields and slow down labour mobility, thereby delaying the transfer of acquired knowledge and experience to the economy.<\/span>\u00a0<\/span><\/p>\n

Therefore, as Baic Law Firm, in line with the precedents of the Court of Cassation, we are of the opinion that although the duration of non-compete obligations may be determined as a maximum of two years, due to the rapidly changing labour market driven by technological developments, such restrictions should ideally be limited to a maximum of one year. In this way, positive sustainable effects can be achieved in terms of knowledge dissemination, labour mobility, social justice, and market dynamism.<\/span>\u00a0<\/span><\/p>\n

In addition, the second paragraph of Article 445 of the TCO regulates the judge\u2019s authority to limit excessive non-compete obligations. According to this provision, the judge may impose limitations in terms of the scope or duration of the non-compete obligation by freely evaluating all circumstances and conditions and by taking into account, in an equitable manner, any consideration undertaken by the employer. Although it is not a condition for validity, consideration refers to a payment or similar obligation undertaken by the employer in return for the non-compete obligation, and in the event of a potential dispute, the existence of such consideration allows the limits of the non-compete obligation to be interpreted more broadly in favour of the employer. In this context, particularly in agreements where consideration exists, it is possible to determine a longer duration for the non-compete obligation.<\/span>\u00a0<\/span><\/p>\n

3.2. Limitation in Terms of Place<\/span><\/b>\u00a0<\/span><\/p>\n

In a non-compete agreement, the geographical area in which the restriction applies must also be determined. This scope may be defined as a region, city, or country, or it may be structured based on the employer\u2019s field of activity. However, since the protective scope of the non-compete obligation from the employer\u2019s perspective essentially corresponds to the area in which the employer conducts its commercial activities, areas where the employer does not operate should not be included within the scope of the restriction. Otherwise, including regions outside the employer\u2019s commercial activities within the scope of the non-compete agreement would clearly contradict the requirement of a legitimate interest on the part of the employer. For example, a non-compete agreement between an employer and an employee who has left a company operating in the Mediterranean region should not be drafted to cover the Marmara region.<\/span>\u00a0<\/span><\/p>\n

In line with established precedents of the Court of Cassation, determining the geographical scope of a non-compete obligation to cover the entire country or to extend on a global scale is generally considered disproportionate, except in certain exceptional cases. Particularly in non-compete agreements where no consideration is provided, the geographical limitation is expected to be significantly narrower. At this point, courts assess whether the non-compete agreement and the limitations it imposes are reasonable by evaluating the nature of the work and, on an individual basis for each employee, examining factors such as the employee\u2019s position, the nature of their duties, their social life, and their professional career.<\/span>\u00a0<\/span><\/p>\n

It should be noted that extending non-compete obligations over broad geographical areas may, in particular, prevent the emergence of new ventures operating in the same sector within certain regions, restrict regional labour mobility, and negatively affect a sustainable labour market by reducing economic dynamism.<\/span>\u00a0<\/span><\/p>\n

3.3. Limitation in Terms of Subject Matter<\/span><\/b>\u00a0<\/span><\/p>\n

Another aspect subject to legal limitation in non-compete agreements is the type of work. In other words, the restriction must remain limited to the scope of the activities carried out by the employee within the employer\u2019s organization. Accordingly, prohibitions covering the employee\u2019s entire profession will not produce legal effect. Likewise, activities that the employer merely undertakes or promises to include in its field of activity in the future should not fall within the scope of the non-compete obligation.<\/span>\u00a0<\/span><\/p>\n

In addition, it is not appropriate to conclude non-compete agreements with every employee working at the workplace. The employee party to such agreements should be limited to those who, by virtue of their duties, have access to the employer\u2019s trade secrets and confidential information. While the employee\u2019s position within the organization is an important criterion, it is not sufficient on its own for evaluation. For instance, it may be accepted that a human resources director does not have knowledge of the employer\u2019s trade secrets, whereas a sales employee with significantly fewer authorities within the organizational hierarchy may, in fact, possess such knowledge.<\/span>\u00a0<\/span><\/p>\n

4. Penalty Clause and the Principle of Reciprocity<\/span><\/b><\/h4>\n

In employment relationships, it is not always possible for the employer to prove that it has suffered damage due to a breach of the non-compete obligation. In particular, loss of profit arising from competition often becomes apparent long after the breach has occurred. In such cases, in order to establish balance within the non-compete agreement and to ensure its functionality, penalty clause provisions are included in the agreements.<\/span>\u00a0<\/span><\/p>\n

A \u201cpenalty clause,\u201d defined as an agreement whereby the debtor undertakes to pay a penalty to the creditor in the event that the obligation is not performed at all or is not duly performed, serves as a mechanism to secure the performance of the obligation not to compete in employment relationships. Accordingly, if the employee acts in breach of the non-compete obligation, they will be under an obligation to pay the penalty stipulated in the agreement, regardless of the damage suffered by the employer. Indeed, since Article 180 of the TCO provides that \u201ceven if the creditor has not suffered any damage, performance of the agreed penalty is required,\u201d the employer is entitled to claim the agreed penalty without having to prove any damage.<\/span>\u00a0<\/span><\/p>\n

At this stage, it is also necessary to address the Principle of Reciprocity, which is one of the fundamental principles of Turkish Labour Law. Since Article 420 of the TCO stipulates that \u201ca penalty clause stipulated in service contracts solely to the detriment of the employee shall be invalid,\u201d it is prohibited to include penalty clauses only against the employee in employment contracts. As this principle\u2014also referred to in doctrine and case law as the \u201cPrinciple of Reciprocity\u201d\u2014is established as a general rule in Turkish Labour Law, it is nevertheless possible, under certain conditions, to deviate from this principle, meaning that the penalty clause may be regulated unilaterally. Indeed, non-compete agreements constitute one of the exceptional types of contracts in which the penalty clause may be stipulated solely against the employee. Accordingly, a penalty clause regulated only against the employee due to a breach of the non-compete obligation is valid.<\/span>\u00a0<\/span><\/p>\n

However, it should also be noted that pursuant to Article 446\/2 of the TCO, which provides that \u201cif a breach of the non-compete obligation is subject to a penalty clause and unless otherwise agreed in the contract, the\u00a0employee may be released from the non-compete obligation by paying the stipulated amount; however, the employee remains liable to compensate any damage exceeding this amount,\u201d it is possible for the employee to be released from the obligation not to compete by paying the penalty amount. In order to prevent this, it must be explicitly stated in the contract that the penalty clause is cumulative with performance, meaning that the contrary of the cited provision must be clearly stipulated in the agreement.<\/span>\u00a0<\/span><\/p>\n

At this point, in order to ensure sustainability, it is of particular importance that the penalty amount be determined in proportion to the employer\u2019s damage and at a level that ensures deterrence, rather than serving a punitive purpose. In practice, the amount of the penalty is generally determined based on the employee\u2019s gross monthly salary, and the penalty is agreed upon as multiples thereof. However, if the penalty amount is excessively high, the judge may reduce it. In addition, if the damage suffered due to the breach of the non-compete obligation exceeds the penalty amount, the employer retains the right to file a compensation claim for the excess damage.<\/span>\u00a0<\/span><\/p>\n

5. Conclusion and Evaluation<\/span><\/b><\/h4>\n

In our opinion, non-compete agreements are among the types of contracts that must be subject to specific scrutiny and interpreted narrowly under Turkish Labour Law. This is because such agreements directly interfere with the employee\u2019s constitutionally protected freedom to work, and such interference can only be considered legitimate where there exists a clear, concrete, and protectable interest of the employer.<\/span>\u00a0<\/span><\/p>\n

In this context, non-compete provisions that are frequently encountered in practice and drafted in broad and abstract terms are not enforceable in light of Articles 444 and 445 of the TCO. In particular, imposing a non-compete obligation in cases where the employee does not have actual access to the employer\u2019s trade secrets or customer base exceeds the limits of legal protection and takes on the character of a punitive measure that goes beyond the purpose of the agreement.<\/span>\u00a0<\/span><\/p>\n

Nevertheless, although non-compete obligations that are disproportionately drafted in favour of the employer in terms of place, time, and subject matter, or penalty amounts that are excessively determined, do not directly result in invalidity, they are, in any event, restricted through judicial intervention. This clearly demonstrates that freedom of contract is not absolute and that non-compete provisions can only remain valid within the framework of the principles of proportionality and equity.<\/span>\u00a0<\/span><\/p>\n

On the other hand, non-compete agreements should be evaluated not only in terms of individual employment relationships but also with regard to the sustainability of labour markets. Indeed, excessively broad and rigid non-compete obligations restrict the circulation of knowledge and experience, weaken market competition, and ultimately harm economic dynamism. Conversely, non-compete provisions that are structured in a proportionate and purpose-oriented manner both protect the legitimate interests of the employer and contribute to the establishment of a fair, competitive, and sustainable labour market structure.<\/span>\u00a0<\/span><\/p>\n

In conclusion, the validity and enforceability of non-compete agreements are directly related not merely to the fulfilment of formal requirements, but rather to the authenticity of the employer\u2019s interest in the specific case and the proportionality of the imposed restrictions. For this reason, instead of standard and generalized non-compete provisions, narrowly tailored, justifiable, and sustainability-oriented arrangements should be preferred, as they are essential both for legal certainty and for the establishment of a healthy labour market.<\/span><\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-137302","hot_topics","type-hot_topics","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/hot_topics\/137302","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/hot_topics"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/hot_topics"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=137302"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}