A non-compete clause agreed between the parties is an agreement of a special kind, providing that after the employment relationship has come to an end the employee will, for a defined period, refrain from activities capable of competing with the former employer.
This agreement creates an obligation separate from the employment contract and takes effect only where the strict conditions required by statute are met. Clauses that are not drawn up in writing, that impose disproportionate restrictions as to duration and geography, or that do not rest on an interest of the employer worthy of protection may be treated as invalid. This obligation, limited to a maximum of two years, may not be framed so widely as to endanger the employee’s economic future.
In this briefing note we examine the non-compete clause in detail within the framework of Arts. 444–447 of the Turkish Code of Obligations No. 6098, under the headings of the conditions of validity, the limits of proportionality, the sanctions for breach and the course of the proceedings.
What Is a Non-Compete Agreement?
A non-compete agreement is an agreement by which the employee undertakes to refrain, for a defined period after the end of the employment relationship, from activities that would compete with the employer. By that undertaking the employee accepts that he or she will refrain from ventures capable of causing loss to the former employer through the use of its customer base, trade secrets and information relating to production.
This institution, regulated in Articles 444 to 447 of the Turkish Code of Obligations No. 6098, is a particular manifestation of the duty of loyalty arising from the employment contract, extending into the period after the relationship has ended. The obligation is valid, however, only to the extent that it remains within the conditions and limits drawn by the statute.
The Statutory Framework
An employee having capacity to act may, under Art. 444 of the Turkish Code of Obligations No. 6098, undertake an obligation not to compete for the period following the end of the employment relationship. For that obligation to arise, however, the employer must have a legitimate interest worthy of protection, the employee must have acquired information concerning the customer base or the secrets of production in the course of the work, and the use of that information must create a risk of significant harm to the employer. As will be seen, the non-compete obligation is not absolute but a restrictive agreement made subject to conditions.
How It Differs from the Employment Contract
A non-compete clause is not part of the employment contract but an obligation independent of it. Even if the employment contract comes to an end, a non-compete obligation validly constituted may retain its force.
While the employment relationship continues, the employee’s abstention from competition is in any event a requirement of the duty of loyalty. The function of the non-compete clause is to carry that obligation into the period after the relationship has ended.
The Basis in the Code of Obligations
The detailed regulation of the institution is contained in Arts. 444–447 of the Turkish Code of Obligations No. 6098. The legislature has on the one hand had regard to the employer’s interest and, on the other, in order to protect the freedom to work, imposed limits as to duration, place and field of activity.
For the purposes of Art. 445 of the Turkish Code of Obligations No. 6098, those limits may be summarised as follows: the prohibition may not exceed two years as to duration; it must remain within reasonable bounds as to geography and field of activity; and it must not be so onerous as to endanger the employee’s economic future. The power to narrow provisions that exceed those bounds rests with the court.
Freedom of Contract and Its Limits
Although the non-compete clause is regulated within the scope of the principle of freedom of contract, there is no unlimited freedom here. The freedom to work and to engage in economic activity is under constitutional guarantee. The prohibition therefore becomes valid only to the extent of the employer’s legitimate interest and within the framework drawn by statute.
Provisions whose duration has been set excessively long, whose geographical scope has been left indeterminate, or which close off the field of activity without limit may be treated as invalid, and may equally be narrowed by the court.
The Conditions of Validity of the Non-Compete Obligation
The Requirement of Written Form
Under Art. 444 of the Turkish Code of Obligations No. 6098, a non-compete clause must be drawn up in writing. Writing here is a condition of validity; it is not merely a requirement of proof.
Non-compete provisions agreed orally, or not set out clearly and in writing in the text of the employment contract, produce no effect. Likewise, a text that does not bear the employee’s signature acquires no binding force.
In practice, therefore, the clause must be drafted clearly, precisely and in writing.
The Employee’s Capacity to Act
An undertaking not to compete may be given only by an employee having full capacity to act. Undertakings of this kind given by persons lacking capacity of discernment or by those of limited capacity are invalid.
The purpose of the rule is to ensure that an obligation directly affecting a person’s economic future is undertaken by a conscious and freely formed intention.
The Employer’s Interest Worthy of Protection
A non-compete obligation is not treated as valid in respect of every employee; the employer must genuinely have a legitimate interest worthy of protection. That interest most often rests on the customer base, methods of production, trade secrets and technical knowledge and particular know-how.
If the employee’s position at the workplace does not give access to information of that character, the non-compete clause may be treated as invalid.
Access to Information and the Requirement of a Risk of Harm
Under Art. 444 of the Turkish Code of Obligations No. 6098, for the prohibition to be valid the employee must have acquired knowledge of the employer’s customer base or secrets of production while the employment relationship continued. In addition, there must be a possibility that the employer will suffer significant harm if that information is used.
These two elements are required together: the employee must actually have obtained the information in question, and the use of that information must carry the potential to cause loss to the employer.
An "intention to impose a non-compete obligation" is not sufficient on its own. The employee’s position, field of duties and degree of access to information are assessed on the concrete facts.
The Limits of the Non-Compete Obligation
Since a non-compete obligation directly restricts the freedom to work, the legislature has subjected this institution to strict limits. Under Art. 445 of the Turkish Code of Obligations No. 6098, the duration of the prohibition, the geography and the field of activity it covers must be proportionate to the employer’s interest worthy of protection. Provisions that exceed the bounds of proportionality may be treated as invalid or may be narrowed by the court.
These limits seek to strike a balance between protecting the employer’s interest and securing the employee’s economic future.
The Time Limit (Two Years at Most)
Art. 445 of the Turkish Code of Obligations No. 6098 expressly provides that a non-compete obligation may not exceed two years. That is the statutory maximum, and the parties may not agree a longer period by contract. In determining the duration, matters such as the nature of the trade secrets to which the employee had access, how rapidly the market changes and the extent to which the employer’s customer base requires protection are taken into account.
Clauses imposing a prohibition of three years, five years or of unlimited duration are plainly contrary to the statute. In practice the courts may narrow the clause by reducing the period to two years; where the excess is very serious, the agreement may also be treated as wholly invalid.
The essential criterion here is whether the employer’s interest can be protected within a reasonable period.
The Limit as to Place
The prohibition must be framed by reference to a defined and concrete geographical area. That area must be proportionate to the region in which the employer actually operates. A prohibition covering the whole of Türkiye in the case of a company doing business only in Ankara, or a clause stated to apply "worldwide" in the case of a company operating on a national scale, is generally regarded as disproportionate.
In establishing the geographical scope, answers are sought to the following questions: in which region does the employer actively carry on commercial activity; which market are the customer details acquired by the employee capable of affecting; does the prohibition imposed make it wholly impossible for the employee to find work in other regions?
Indeterminate and unlimited geographical expressions such as "everywhere", "the whole world" or "on a global scale" give rise to problems of validity.
The Limit as to Field of Activity
The prohibition must cover only activities in direct competition with the employer. Clauses so wide as to leave the employee unable to practise his or her profession at all are regarded as unlawful.
By way of example, abstract and all-embracing expressions such as "may not engage in any similar commercial activity" or "may not work in the same sector in any way" are generally treated as invalid.
The field of activity must be determined in a manner connected with the employer’s line of business, the employee’s job description, and the information and customer base he has acquired. The purpose is not to bring the person’s career to an end altogether but only to protect the employer’s concrete commercial interest.
The Consequences of Excessive Restriction and the Court’s Power to Narrow
The most striking feature of Art. 445 of the Turkish Code of Obligations No. 6098 is the power conferred on the court to narrow the agreement. Where the prohibition has been set too long in duration, left too wide geographically, or taken to excess as regards the field of activity, the court may narrow its scope in a manner consistent with equity. If the excess seriously endangers the employee’s economic future, the agreement may also be treated as wholly invalid. The essential criterion of judicial review is the principle of proportionality.
The Sanction for Breach: Contractual Penalty and Damages
An employee who acts in breach of a validly constituted non-compete obligation may face the sanctions provided for in the agreement. In practice those sanctions are most often framed as a contractual penalty and liability in damages.
Not every penalty clause takes effect of itself, however. If, by the criteria of Arts. 444–447 of the Turkish Code of Obligations No. 6098, the principal prohibition does not stand, the penalty clause attached to it is likewise ineffective. The fate of the contractual penalty depends first and foremost on the validity of the principal obligation.
The Validity of the Penalty Clause
Non-compete provisions most often stipulate a defined sum by way of contractual penalty. That sum represents the amount the employee has agreed to pay in the event of acting in breach of the prohibition.
For the contractual penalty to take effect, the non-compete provision must be valid, proportionality must have been achieved as to duration, place and field of activity, and the sum agreed must not be excessive.
If the non-compete clause is invalid, the contractual penalty attached to it likewise acquires no binding force.
The Court’s Power to Reduce the Contractual Penalty
Under Art. 182 of the Turkish Code of Obligations No. 6098, the court may reduce a contractual penalty that is excessive. Sums disproportionate to the employee’s economic circumstances, amounts plainly irreconcilable with the loss actually suffered, and provisions that go beyond the aim of deterrence and turn into punishment may be reduced on this basis.
That power is used very frequently in non-compete disputes. In making its assessment the court has regard both to the principle of proportionality and to the employee’s economic future.
Actual Loss and Proof
In the event of a breach of the prohibition, two separate routes are open to the employer: to claim the contractual penalty agreed in the agreement, or to claim compensation for the actual loss it has suffered.
Where a contractual penalty has been agreed, the employer is as a rule not obliged to prove its loss; it may claim the sum stated in the agreement.
Where actual loss is claimed, by contrast, the breach of the non-compete obligation, the concrete loss arising from that conduct, and the causal link between the loss and the breach must be established. The calculation of the loss creates difficulty in practice; matters such as the loss of customers, a decline in market share or a fall in turnover must be demonstrated by concrete evidence.
Claiming the Contractual Penalty and Damages Together
Where the agreement contains an express provision to that effect, the employer may claim both the contractual penalty and its loss exceeding that sum.
Where there is no such provision, the penalty clause most often functions as liquidated damages, and no further loss may be claimed beyond it. Even so, losses exceeding the sum stipulated must still be borne by the employee.
The Ending of the Non-Compete Agreement
A non-compete obligation is not a burden of unlimited duration. Art. 447 of the Turkish Code of Obligations No. 6098 provides that in certain cases the clause ceases to exist of itself or loses its binding force.
Expiry of the Period
Under Art. 445 of the Turkish Code of Obligations No. 6098, the clause may take effect for a period of at most two years. With the expiry of the period agreed, the employee’s obligation to refrain from competition ceases; after that date neither the penalty sum nor damages may be claimed.
The Employer Ceasing to Have an Interest Worthy of Protection
Where the employer’s interest worthy of protection ceases to exist, the prohibition likewise comes to an end. If, for example, the employer has changed its field of activity, or the commercial information known to the employee has ceased to be current, the maintenance of the obligation is not protected in law.
Wrongful Termination by the Employer
If the employer terminates the employment contract without just cause, the non-compete obligation loses its binding force. An employee dismissed without fault on his part is not obliged to comply with the prohibition (Art. 447 of the Turkish Code of Obligations No. 6098).
For further detail on this subject, our note entitled In Which Cases May the Employer Terminate the Employment Contract for Just Cause? may be consulted.
Agreement of the Parties
The parties may by their mutual intention remove the prohibition altogether, and may equally narrow its scope. It is important, as a matter of proof, that changes of this kind be made in writing.
Proceedings in the Event of a Breach of the Prohibition
Where a valid non-compete obligation is breached, the employer may have recourse to legal remedies directed both at stopping the breach and at making good its loss. In the course of the process an injunction, a claim for the contractual penalty and claims for damages may arise.
Interim Injunction
If the breach is continuing, or there is a likelihood of its occurring, the employer may seek an interim injunction from the court. The possibility of seeking an order restraining the conduct in breach depends, however, on that power having been expressly provided for in writing in the text of the agreement. In addition, the employer’s interests must be such as to justify such an application. Where these two conditions are met together, the employer may seek to have the breach brought to an end.
Art. 446 of the Turkish Code of Obligations No. 6098, moreover, confers on the employer a right of claim directed only at the employee; it does not extend to third parties. It is therefore not possible to order the termination of the service contract concluded by the employee with the new employer.
By way of example, the ending of particular customer relationships or the prevention of the use of trade secrets may be sought. The court may grant an injunction where the requirement of prima facie proof is met and there is a likelihood of loss that would be difficult to make good.
The Action for Damages
In the event of a breach of the prohibition, the employer may claim the contractual penalty contained in the agreement and its actual loss exceeding that sum. In a claim for actual loss the employer must establish the breach, the concrete loss it has suffered and the causal link between the breach and the loss.
The Court with Subject-Matter and Territorial Jurisdiction
Disputes arising from this agreement fall as a rule within the subject-matter jurisdiction of the Commercial Court of First Instance.
The disputes over jurisdiction previously experienced in this field were settled by the Grand General Assembly on the Unification of Case Law of the Court of Cassation by its decision dated 13.06.2025, docket no. 2023/1, decision no. 2025/3.
That decision characterised non-compete disputes falling within Arts. 444–447 of the Turkish Code of Obligations No. 6098 as absolute commercial actions for the purposes of Article 4(1)(c) of the Turkish Commercial Code No. 6102, and determined that they are to be resolved before the Commercial Court of First Instance. It has thus become beyond dispute that jurisdiction over actions brought on the allegation that the prohibition has been breached after the end of the employment relationship lies with that court.
Territorial jurisdiction is determined according to the general rules, and the court of the respondent’s domicile is treated as having jurisdiction. If the agreement contains a jurisdiction clause, the validity of that provision is assessed separately.
The Allocation of the Burden of Proof
An employer alleging that the prohibition has been breached must prove two matters: that a validly constituted non-compete obligation exists, and that the employee has carried on an activity in breach of it. Where actual loss is claimed, the loss itself and the causal link must also be established.
Court Fees and Litigation Costs
Actions claiming a contractual penalty and damages are subject to an ad valorem court fee. Where an injunction is sought, security may also have to be lodged. At the end of the action the litigation costs and the attorney’s fee are borne by the party that has lost the case.
The Independent Legal Assessment
Non-compete clauses inserted as a standard provision at the contract stage often prove ineffective when a dispute arises. What determines validity is not the presence of the clause in the text but whether the employee genuinely had access to information worthy of protection, and the balance struck as to duration, geography and field of activity. Following the decision on the unification of case law, the clarification of the question of jurisdiction is of further importance in ensuring that files are brought before the correct court.
In a particular dispute the following matters should be assessed first:
- whether the clause is in writing and bears the employee’s signature
- whether the employee’s position in fact gave access to the customer base or to secrets of production
- whether the limits as to duration, place and field of activity are framed proportionately to the employer’s actual field of activity
- fixing the amount of the contractual penalty at a reasonable level so as to reduce the risk of reduction
- documenting by which party and on what grounds the employment contract was brought to an end
- where an interim injunction is to be sought, ensuring that the power to seek it is expressly provided for in the agreement
Independent Legal provides advisory services in commercial and labour law disputes, from the drafting of non-compete clauses at the contract stage through to the conduct of actions brought in the event of a breach.