Aruba court upholds non-competition clause in employment agreement – March 2015

The Court of First Instance of Aruba in a recent decision upheld a non-competition clause in an employment agreement.

This decision is in line with (some) previous decisions in which such a clause was upheld. It should also be mentioned that in some cases such clauses were not upheld. This is typical in employment litigation in which the particulars of the case are very determinant factors for the outcome of the case.In this case it was wine salesperson working for a local wine wholesaler (“Employer”) that after a(n) (short) employment left the company to work for another wine wholesaler (“New Employer”). The court considered among others: (i) the non-competition clause that was in place; (ii) the fact that Employer and New Employer were both active in the same industry, had similar product line, similar pricing and had over-lapping customers; and (iii) the fact that the employer had or was deemed to have pricing and costing information of Employer. The court rejected the argument made by the employer that alleged that he/she would be adversely affected – in light of the limited options available in Aruba – if the non-competition clause was upheld. The latter was also based on the fact that the Employee had worked in different industries prior to joining Employer. The court also rejected Employee’s argument that he had switched employment because he was offered better conditions.

This decision will serve, in my opinion, as a proper reminder for employees and employers to take due care when entering into an employer-employee relationship but also to remind the enterprises not to (willingly) engage in unfair competition by actively recruiting key-employees of the competition. After all “the knife cuts both ways”.

This decision further shows that the labor laws in question on this matter as is today continues to serve a purpose and that the legislator should not tamper with the legislation on non-competition clauses.