Instances of Employee Breach of Contract

Contracts between employee and employer are generally designed to define the responsibilities and duties that each party has to the other, and protect the rights and interest of both parties.

Some of the most important articles found in a contract for employment are, non-compete clauses, breach of confidentiality, and failure to provide adequate notice of resignation. What can you do if an employee violates these conditions of a contract?

Violation of non-compete clause

Non-compete clauses (also known as non-involvement clauses) are often integrated in employment contracts to prevent an employee — for a limited time — from joining a competitor after their resignation or termination. It serves as a protection to the employer.

An employer that has reason to believe a violation has occurred can file for damages or a request for an injunction. This allows the court to compel the employee to comply with the terms of the non-compete agreement. To succeed, the employer must prove all of the following:

  • The employer has a clear right to be protected under relevant laws.
  • There is substantial infringement of such rights.
  • The injunction is necessary to prevent irreversible damage to the employer’s business.
  • There are no other suitable legal remedies to prevent irreversible damage or injury.

In seeking compensatory damages, the employer must prove an actual loss or injury to the business or company. If that fails, the court may still rule in favor of the employer and consider nominal damages (usually a smaller sum of payment).

Breach of confidential information

This usually happens when an employee disseminates key information about the inner workings of the business or shares intellectual property owned by the employer. Breach of confidential information can occur during employment or some time after the employment relationship has ended. The employee’s breach of confidential information can be a just cause for termination as provided under Labor Code Article 282. The affected employer would normally have 3 courses of action open to them, including:

  • Invoking internal rules on serious misconduct and pursuing a labor case against the offending employee — citing breach of confidential information as just cause for termination, under Article 282 of the Labor Code.
  • Recovery of damages due to breach of any express or implied contractual obligations.
  • Requesting the court to order the destruction of any relevant documents containing confidential company information.

After an employee has resigned, breach of confidential information will only be considered if the information pertains to closely guarded business secrets or assets. Some examples of this include: future product launches, secret formulas, client names, strategic plans, and key manufacturing processes.

Failure to provide 30-day notice of resignation

According to Article 300 [285] of the Labor Code, an employee must send a written notice to the employer at least a month in advance before officially resigning from a position.

The article aims to give the employer adequate time to find a competent replacement for the resigning employee — with the purpose of avoiding potential business disruptions and loss.

Failure to send a proper written notice can give an employer cause to seek the recovery of damages in court.

Seek professional legal counsel

Consult lawyers from Duran & Duran-Schulze Law to address and resolve matters relating to breaches of contract or other labor-related concerns. To schedule a consultation, call us at (+632) 478 5826 or send an email to info@duranschulze.com.

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