Non-compete agreement in the Republic of Kazakhstan: application practice
1) The provisions of the Labor Code of the Republic of Kazakhstan governing the conditionon non-competition
The concept of “non-competition clause”, as well as other aspects of its content, first appeared in the labor legislation of the Republic of Kazakhstan in 2016 with the entry into force of the currentLabor Code of the Republic of Kazakhstan dated November 23, 2015 No. 414-V ZRK(hereinafter referred to as the Labor Code of the Republic of Kazakhstan).
In particular, according to paragraphs. 9) clause 1 art. 1 TC RK,non-compete clause– these are the terms of a non-competition agreement that limit the employee’s right to take actions that could cause damage to the employer.
Based on Art. 29 of the Labor Code of the Republic of Kazakhstan, a non-competition agreement can be concluded between an employer and an employee. The said agreement providesthe employee’s obligation not to carry out actions that could cause damage to the employer. The non-competition agreement establishesrestrictions and conditions for their acceptance, and compensation may also be established for the period of validity of this condition, except for cases where the non-competition condition is provided for by the legislation of the Republic of Kazakhstan. The list of positions and works held or performed by employees with whom a non-competition agreement may be concluded is approved by an act of the employer.
According to paragraphs. 5) clause 8 of Art. 123 of the Labor Code of the Republic of Kazakhstan, financial liability in the full amount of damage caused to the employer is assigned to the employee in case of violation of the non-competition condition, which resulted in damage to the employer.
The Labor Code of the Republic of Kazakhstan does not contain any other provisions related to the non-competition clause.
The emergence of the concept in question was received quite optimistically by both the legal community and employers. However, when implementing the non-compete clause in practice, company lawyers were faced with a large number of ambiguous provisions that remain unresolved to this day. The ambiguity in the interpretation of these provisions entails a different understanding of the meaning and application of the non-competition clause both by employers and authorized government bodies and courts. Which, in turn, causes courts to make opposing decisions on the same subject of dispute.
