The Turkish Labor Code (Law No. 4857) does not impose any non-compete obligations on employees. Nevertheless, during the currency of an employment contract, the obligation of fidelity (obligation de fidelite-Treuepflicht) can be contractually imposed on the employee requiring him to act in good faith and in the legal interests of the employer.

Any post-termination prevention of competition by the employee is regulated by the employment contract through a non-competition clause or by executing a separate "non-competition agreement" under the general provisions of the Code of Obligations (Law No.818) and the established principles of the Turkish Competition Board.  This Board, a governmental body established as per Article 20 of the Law Regarding the Protection of Competition (Law No. 4054) under the Turkish Competition Authority, ensures the formation and development of markets for goods and services in a free and sound competitive environment, observes the implementation of such law, and fulfills the duties assigned to it thereby.

The Code of Obligations imposes a number of conditions that must be satisfied for a non-competition clause to be valid.  First, there must be a common understanding between the parties that an employee knows the employer's customers and confidential information, and that, accordingly, there is a risk that the employee may cause considerable loss to the employer by using such information. In addition, non-competition clauses must be reasonable with respect to their term, geographical application and nature of work to which the prohibition applies.

What is considered a reasonable duration for a non-compete provision differs according to the practices in the relevant market. The common practice of the Turkish Competition Board is to allow the insertion of a non-compete provision into employment contracts for a maximum period of two years, provided that the market conditions allow such a period. Shorter periods of two to six months for volatile market conditions may be applied in certain markets, for example, banking and finance. The Code of Obligations also stipulates that for validity purposes any prohibition on competition must be in writing.

Focusing on the consequences of non-competition clauses inserted into employment contracts, in the event of a breach of a non-competition clause by an employee and upon a court judgment in this respect, the employee will be liable to compensate for the losses of the employer. If a penalty has been issued, the employee shall be released from the non-competition clause by paying the penalty fee. However, if the employer proves that the loss suffered is more than the penalty paid, then the excess amount shall also be compensated by the employee.

Furthermore, the non-competition clause terminates upon the determination of the non-existence of any interest of the employer worthy of such protection (Code of Obligations, Article 352/1). In addition, if the employment contract has been terminated by the employer on invalid and unjustifiable grounds, no lawsuit can be filed against the employee for breach of the non-competition clause (Code of Obligations, Article 352/2). The employee can always reserve the right to initiate legal proceedings against such provisions.