Experiences
Non-compete, confidentiality, and conflict of interest agreements

Breach of non-compete agreement by joining a competitor

The matter originated when a former executive in the Human Resources area of a leading textile retail group, after terminating his employment relationship, joined a company in the same sector in an executive position with very similar responsibilities. The core of the conflict was the alleged breach of a post-contractual non-compete agreement, designed precisely to prevent strategic knowledge and internal methodologies from being transferred to a competitor.
From the initial analysis, the risk was not limited to a hypothetical “leak of documents,” but to something more difficult to detect and, at the same time, more damaging: the cognitive use of know-how in the daily decision-making of the competitor (remuneration policies, staff organization, performance evaluation, succession plans, etc.). This point is key because, in senior management roles, competitive advantage is often transmitted through processes, criteria, and management routines.
To rigorously support the case, it was essential to demonstrate that both companies actually competed in the same market area. Our work consisted of proving, with a structured test, that there was effective competition by product type, customer profile, price level, and channels/points of sale (physical and online).
In parallel, we addressed the verification of the functional fit of the position assumed by the former executive: same hierarchical level, global scope of responsibility in HR, and real ability to implement policies and systems with a direct impact on efficiency and costs. This allowed us to conclude, with expert logic, that the acquired knowledge was directly transferable without the need for an explicit exchange of information.
In terms of risks, the report very specifically identified what type of information and capabilities were potentially compromised: salary and organizational structures, staff planning, access to people management tools and sensitive data, in addition to participation in committees and corporate plans. The technical conclusion was that the risk of transfer was high and verifiable, supported by objective factors such as functional coincidence, competitive similarity, and the immediacy of the change.
Finally, the case focused not only on “what happened” but on what effects it could produce: loss of exclusivity of internal processes, possible recruitment of trained talent, replication of remuneration policies, and impact on the competitive advantage in human capital management; and, on the competitor’s side, operational strengthening through the incorporation of know-how.
Our methodology combined documentary evidence, competitive analysis, and economic valuation. First, we structured the assignment into verifiable objectives:
(i) prove effective competition between the companies,
(ii) verify the incorporation into a management position during the term of the agreement, and
(iii) economically assess the impact (loss of exclusivity, enrichment of the executive, benefits of the competitor, and transferred costs/risks).
Then we applied a clear and defensible competition test (product/customer/price/channels), avoiding intuitive conclusions and relying on comparable criteria, with an expert narrative that a judge or counterparty can follow without logical leaps.
Finally, we built a robust and prudent quantification, based on items consistent with the case approach: return associated with the agreement, penalty, internal mitigation costs, and justified estimates of benefits/savings attributable to the incorporation (when complete documentation does not exist, sectoral references and conservative assumptions are used).
The “excellent” result does not depend on grandiloquence but on converting a complex labor conflict into a demonstrable technical story: verified facts, a clear competitive framework, and a quantification that withstands replication. This decisively reinforces the negotiating and procedural position because it reduces the case to objective and measurable points, instead of impressions.
In practice, the report allowed us to articulate a claim and/or defense with three differential strengths:
(1) causal connection between the executive’s role and the real risk of know-how transfer,
(2) demonstration of effective competition between companies, and
(3) consistent economic support that organizes the impact by concepts and makes it auditable.
That combination is what makes the difference between “being right” and being able to demonstrate it with excellence.