Non-competition agreement in Mexico

The non-competition clause is common in individual employment contracts, however; in Mexico application of limitations linked to this sort of clause is not allowed, as it is considered a violation to the worker’s individual guarantees in accordance with provisions set forth under Article 5 relevant to the Mexican Political Constitution.

Employers regularly seek to incorporate these types of clauses to protect their company from leakage of confidential information, industrial secrets, inventions and product development, in order to reduce economic losses, copying of products, etc., therefore they would like to limit the exercise of the profession of the employees for a certain time

Although in Mexico the application of this type of clause is not allowed, which is mentioned in the Federal Labor Law in its Article 134 Fracc. XIII, employees are obligated to “keep the technical, commercial and manufacturing secrets of the products they directly or indirectly produce, or of which they have knowledge due to the work they perform, as well as the administrative matters, whose disclosure may cause damage to the company”. In order to make sure the confidentiality in Mexico, it is recommended to include a confidentiality agreement in the labor contracts; the parties (companies or individuals) agree NOT to disclose information which was shared between them during the labor relationship. (Title Four, Chapter II of the Federal Labor Law), keeping this information confidential, including the processes, developments or products of the companies. In case of breach or violation of the terms of confidentiality, the sanctions of the Federal Criminal Code (articles 210 to 211) may apply.

Do you have any questions or want more information on the non-competition clause in Mexico? We are happy to support you! As part of the WMP Mexico Advisors Group, WMP Legal has assisted medium-sized international companies in all commercial, legal, and administrative matters for over ten years. Here, you will find an overview of our services.