The employer may opt for disciplinary dismissal in cases in which the employee commits unfair competition. To do so, as stated by the Supreme Court in its judgment of December 21, 2021 (Rec. 1090/2019), it is essential to accredit that the company proceeded with dismissal as soon as it became aware of the employee’s conduct.

In the case analyzed by the Labor Chamber of the Supreme Court, the company and worker had included a clause in the employment contract that established the employee’s obligation not to perform any work at the same time for any company operating in the same sector, either at the beginning or during the course of his labor relationship. In addition, it stated that said conduct would be considered as unfair competition, resulting in the immediate termination of the labor relationship by disciplinary dismissal.

The worker was dismissed for being a director of a competitor company with which his employer had participated in an administrative tender prior to his dismissal. However, the worker dismissed considered that there was tolerance by his employer and, therefore, a labor infringement on his part had not been committed.

To resolve the dispute, the Labor Chamber of the Supreme Court recalled the fundamental elements necessary to determine the existence of unfair competition by an employee and whether or not there was an infringement that could give rise to disciplinary dismissal:

  • The Workers’ Statute (WS) does not expressly include the infringement of the duty of non-competition nor unfair competition as grounds for disciplinary dismissal. Nevertheless, article 5.2.d) WS states that a basic duty of a worker is not to compete with the company’s business in the terms provided for by law. Similarly, article 21.1 WS states that work cannot be performed for different employers when it is considered unfair or when exclusivity is agreed for financial compensation.
  • As far as what is understood as unfair competition, the Supreme Court defines it as a worker’s activity that leads to the performance of tasks of the same nature or in the same area of production as those performed under an employment contract, without the employer’s consent and provided there is a real or potential loss. These activities include that of creating or incorporating a competitor company, without it being necessary to actually materialize the implementing or functioning of a new company, given that the characteristic feature of the infringement is the element of intention to carry out premeditated unfair conduct by the worker with respect to the company that not only remunerates his/her work, but also provides the means to acquire experience and professional expertise that is later intended to be used to his/her own benefit and to the detriment of the company.

After pointing out the above, the Supreme Court analyzed the conduct of the dismissed employee. With regard to the knowledge by the company that its employee was the director of a competitive company, it stated that as soon as the company for which the worker was a director competed with defendant, it proceeded with his disciplinary dismissal. It therefore concluded that the Estoppel doctrine was not applicable as alleged tolerance by the company of unlawful competition that resulted in the disciplinary dismissal.

In light of the above, it is essential to act as soon as the infringement that may give rise to a disciplinary penalty is observed, therefore avoiding the expiry of the facts or an allegation that they were tolerated by the company.