In Spain, restrictive covenants are regulated by the Spanish Workers' Statute, which sets out the rules for full commitment and continuation agreements (during employment) and non-competition agreements (after termination).

During the employment contract:

  • Under Spanish employment law, the employee may not provide services to other employers if it is unfair competition with the current employer. This obligation is inherent in the employee's duty of good faith and is therefore strictly observed in every employment relationship, regardless of whether it is expressly agreed under the employment contract. If the employee is in breach, the employer can terminate the employment contract for disciplinary reasons.
  • Apart from this, in principle the employee is entitled to provide services for other employers unless otherwise agreed by the parties. Therefore, an employee will not be able to work for other employers if a "full-time dedication" agreement has been reached between the parties in exchange for an express economic compensation. Under this agreement, the employee agrees not to work for any other employer, even if there is no competition or conflict of interest whatsoever. This agreement can be terminated by the employee by giving the employer 30 days’ notice. In this case, the employee would be obliged to give back to the employer any compensation and any rights relating to the full-time dedication agreement.
  • If the employee receives professional training paid by the employer in order to develop specific projects or works, both parties can agree a written "continuation covenant" under which the employee commits to provide services for the employer for a specific period of no longer than two years. If the employee resigns before the termination of the agreed period, the employer is entitled to receive compensation.

After termination of the employment contract, employer and employee can reach an agreement on post-contractual non-competition, as long as the following requirements are met:

  • The term of the non-compete covenant must not exceed two years for technicians (qualified employees) or six months for other employees.
  • The employer must have an effective industrial or commercial interest which justifies the post-contractual non-compete obligation.
  • The employee must receive adequate economic compensation for the agreed non-compete obligation which must be expressly stated in the agreement. No minimum amount is required by the Workers' Statute, although Spanish Courts have been considering as "adequate" an amount equivalent to 60% to 70% of the salary that the employee would have been entitled to during the non-compete period.
  • No clauses allowing the employer to unilaterally waive the effectiveness of the non-compete obligation can be agreed, as they have been declared null and void by the Spanish Courts.