This article is general information, not legal advice. Every case is examined on its own facts, and every cause of action has its own limitation period.

"The Employee undertakes that for a period of 12 months from the termination of employment, for any reason whatsoever, the Employee shall not engage, directly or indirectly, in any business competing with the business of the Company, anywhere in Israel." That sentence, or one close to it, sits in the same wording in a salesman's contract and in a software developer's, and it was usually drafted before anyone knew who would sign it. For years it sits in the agreement and nobody reads it. It gets read at one particular moment. There is an offer from a competing company, the old contract is on the table, and with it the question that reaches our firm in almost every enquiry on the subject: I signed, so am I bound? Signing a non-compete clause does not make it enforceable. Freedom of occupation is a basic right, and the Labour Court examines every such clause on its own merits.

Where the Labour Court starts

Basic Law: Freedom of Occupation provides that every person in Israel has the right to engage in any occupation, profession or trade of their choice. When an employer asks the Labour Court to enforce a non-compete clause, the hearing starts from that right. The contract comes after it. A clause that restricts the right has to justify itself, and someone who read the agreement carefully and initialled every page has signed a starting point for scrutiny. That much is the rule, and it does not move. What moves the answer in a given case are two things written in the clause itself: what it protects, and how far it goes to protect it.

"The business of the Company": what interest stands behind the clause

Not every wish of an employer to keep a former employee away from a competitor justifies a restraint of trade. Case law recognises several interests that do justify a restriction. Trade secrets, meaning information with economic value because nobody in the market knows it and it is hard to obtain. A special investment by the employer in training the employee, beyond the induction every new employee receives. Access to a defined client list that is not general market knowledge. And separate consideration paid to the employee expressly for the undertaking not to compete.

Those interests exist, even when they are inconvenient for the employee. A company whose employee walked out with its internal price list in his head, after two years of meeting every client in its name, comes to the Labour Court with a claim that has something under it. Our firm represents employers in such cases too, and from that side of the table the question is the same one, reversed: what exactly was taken, and which sentence in the agreement covers it. An employer who cannot point to an interest of that kind, and says only that it does not want to see the employee at a competitor, arrives at the hearing with a clause designed to prevent competition for its own sake. A clause like that rarely survives.

A clause drafted in advance for every employee in the same words is examined in the Labour Court against the one employee who signed it.

"12 months", "anywhere in Israel": how far the clause goes

Even where there is an interest, the Labour Court measures the restriction against it, and measures it word by word. What is prohibited: a restriction narrowed to the field where the employee was exposed to sensitive information, or wording that blocks any similar work, including work that has nothing to do with that information. For how long: the longer the period, and the less it is tied to the time during which the information is still worth something, the more likely it is to be found excessive. A year of non-competition over a price list that is updated every quarter is a question in its own right. And over what territory: "anywhere in Israel" is measured against the market where the employer sells today. A company whose clients are all in Jerusalem and its surroundings will have to explain why the restriction also applies in Eilat.

A clause that is too wide on any one of the three can be struck down even where an interest stands behind it. Sweeping wording drafted for every employee is intimidating to read, and it is read differently in the Labour Court: the court is not bound by the full text, and may narrow the restriction so that it covers only what deserves protection, if anything. That cuts both ways. An employee who signed a sweeping clause cannot assume it will fall in its entirety, and an employer who drafted one cannot assume it will get it as written. In other circumstances, where the clause was drafted in advance for the specific role and the information that employee was exposed to, and limited in time and territory in proportion to that information, the employer arrives at the hearing with a clause that can be defended, and the argument moves to what the employee took with them.

The moment the clause comes out: a letter, then an application for an injunction

On the day the employee gives notice that they are moving, a warning letter from the employer's lawyer usually follows. The letter quotes the clause and demands that the new job not be started. It says what the employer claims. It does not say what the Labour Court will decide. An employer who wants to enforce applies to the Labour Court for a temporary injunction, before the main claim is heard on its merits. At that stage the court examines, on the face of it, the same questions, interest and proportion, and adds a question of harm: what happens to each side if the injunction is granted, and what if it is refused. An employee defending the application does not have to prove the clause is void. It is enough to show a real doubt about its validity. The decision at the interim stage does not always close the case, but it usually signals to both sides which way the scales are leaning.

What gets read before the letter is answered

The examination at our firm starts with the original agreement, the clause as it was written, because there is sometimes a gap between it and the quotation in the warning letter. Then the payslip: separate consideration for the undertaking, if it was paid, appears there on a line of its own, and a clause that appeared "automatically" in the agreement, with nothing paid for it, is examined differently from one that was paid for. Then the role: what exactly the employee was exposed to, and how much of it is still worth something to the employer in the months after leaving. The other side will argue, almost always, that the employee knew perfectly well what they were signing. That is true, and the Labour Court still starts from freedom of occupation. And someone with a new agreement already in front of them reads the clause the same way, except that they read it before signing, while a word in it can still be changed.