- Sections
- P'ninat Mishpat
Friendly Buy-Out? – part II
Case: The plaintiff (=pl) worked successfully for an Israeli hi-tech company (=IHTC). The owners of ITHC (=def), along with pl, started a similar company in America (=SCA), managed by pl, which did not work out well, for reasons that are disputed. Def told pl to return to Israel, replaced him with a different manager, and offered $68,000 to buy pl out. The parties argued about whether pl must commit to not compete with IHTC, and therefore the agreement was not carried out. Pl demands that the deal be carried through, as he already agreed to not compete. Def claim that the agreement never reached a stage of finalization and that they were not aware of the bad state of SCA until they assumed control of it. As a result, they also countersue for $68,000 for the irresponsible way pl ran the company.
Ruling: [Last time we saw that pl cannot make def carry out the proposed agreement. This time we will discuss whether pl is allowed to compete with IHTC. Pl was familiar with the operation of IHTC from his work as an advisor for them before starting SCA.]
There are two possible grounds to forbid a former worker to compete with a former employer. One is based on an agreement between the sides to that effect. The Chatam Sofer (II:9) discusses someone who trained a shochet under the condition that the student would not work in the same region as his teacher. The Chatam Sofer says that competing would be in violation of the prohibition to withhold a worker’s pay. (We point out that the Chatam Sofer referred to a case where the teacher was the sole shochet in his area, so that competition would have had a strong, direct impact on his livelihood.) Rav Z.N. Goldberg (Techumin XVIII) points out that in the framework of a worker’s compensation, one can even obligate himself to not do something. [Ed. note- the dayanim apparently meant to extrapolate that similarly pl could obligate himself to not compete as part of his obligations in return for his salary.] However, in our case, there was no stipulation that pl not compete with IHTC.
However, there may also be an idea of not competing even without an agreement. Shevet Halevi (IV:220) says that workers who see secret practices or equipment which the employer used cannot copy them for use at a new employer or in his own work, and doing so is in the category of actual theft. This does not mean that one cannot compete with his former employers, just that he cannot use secret information obtained from them in competing.
This idea does not apply to using skills and information that the worker developed on the job at his former employers, as long as they are things that are generally available in the market, even if not everyone is privy to them. In our case, pl worked at IHTC years ago, and there are no indications that he possesses secret information from that time to get unfair advantage in competition with them now. In general, in Israel, the interpretation of the law is that only under extreme circumstances can even an explicit condition prevent one from the basic right to freedom of employment.
Ruling: [Last time we saw that pl cannot make def carry out the proposed agreement. This time we will discuss whether pl is allowed to compete with IHTC. Pl was familiar with the operation of IHTC from his work as an advisor for them before starting SCA.]
There are two possible grounds to forbid a former worker to compete with a former employer. One is based on an agreement between the sides to that effect. The Chatam Sofer (II:9) discusses someone who trained a shochet under the condition that the student would not work in the same region as his teacher. The Chatam Sofer says that competing would be in violation of the prohibition to withhold a worker’s pay. (We point out that the Chatam Sofer referred to a case where the teacher was the sole shochet in his area, so that competition would have had a strong, direct impact on his livelihood.) Rav Z.N. Goldberg (Techumin XVIII) points out that in the framework of a worker’s compensation, one can even obligate himself to not do something. [Ed. note- the dayanim apparently meant to extrapolate that similarly pl could obligate himself to not compete as part of his obligations in return for his salary.] However, in our case, there was no stipulation that pl not compete with IHTC.
However, there may also be an idea of not competing even without an agreement. Shevet Halevi (IV:220) says that workers who see secret practices or equipment which the employer used cannot copy them for use at a new employer or in his own work, and doing so is in the category of actual theft. This does not mean that one cannot compete with his former employers, just that he cannot use secret information obtained from them in competing.
This idea does not apply to using skills and information that the worker developed on the job at his former employers, as long as they are things that are generally available in the market, even if not everyone is privy to them. In our case, pl worked at IHTC years ago, and there are no indications that he possesses secret information from that time to get unfair advantage in competition with them now. In general, in Israel, the interpretation of the law is that only under extreme circumstances can even an explicit condition prevent one from the basic right to freedom of employment.

P'ninat Mishpat (683)
Various Rabbis
219 - Acceptance Committee
220 - Friendly Buy-Out? – part II
221 - A Flawed Rental Apartment
Load More

Who’s Responsible for the Leak?
Based on ruling 80133 of the Eretz Hemdah-Gazit Rabbinical Courts
Beit Din Eretz Hemda - Gazit | Tevet 5783

Partnership in a Corporate Venture
Various Rabbis | 5 Adar I 5768

Complicated Employment Agreement – part II
Various Rabbis | Adar II 7 5779

Paying Community Taxes – part I
based on ruling 76111 of the Eretz Hemdah-Gazit Rabbinical Courts
Beit Din Eretz Hemda - Gazit | Sivan 16 5780

Various Rabbis
Various Rabbis including those of of Yeshivat Bet El, such as Rabbi Chaim Katz, Rabbi Binyamin Bamberger and Rabbi Yitzchak Greenblat and others.

Connection to the Present and the Past
Iyar 21 5775

Emotional Sensitivity to Distress
Tammuz 9 5777

Unfulfilled Raffle Prize – part I
5777 Tammuz 22

Compensation for Withheld Salary
5771

Roasted Foods on Pesach
Rabbi Daniel Mann | Nissan 12 5776

Roasted Foods on Pesach
Rabbi Daniel Mann | Nissan 12 5776

Double Wrapping Food in a Treif Oven
Rabbi Daniel Mann | Kislev 4 5777
The Laws of Matza
Rabbi Eliezer Melamed | Nissan 5768

Segula: Part 1: What is Emuna?/When Are We Called "Children" of G-d?
Rabbi Chaim Avihau Schwartz | Nissan 2 5783
The Secret Love
Rabbi Netanel Yossifun | Nissan 2 5783

What are the special prayers of Pesach?
Rabbi Stewart Weiss | Nissan 5783
