Working on your own startup while holding down a full-time job might not be the best option for everyone. Such a decision could lead to some unintended legal consequences for both you and your new venture.
Here are some key legal considerations that could impact the future of your startup.
Restrictive Covenants
Your employment contract with your current employer may include provisions that restrict certain activities. It’s essential to carefully review these clauses to understand how they might affect your plans:
Moonlighting Restrictions: Legally, employees are generally allowed to take on a second job or work on side projects outside their primary employment. However, this freedom can be limited or entirely prohibited through full-time employment contracts.
If you work in a corporate environment, there’s a good chance your contract includes such a clause. These restrictions are often included to prevent conflicts of interest between your primary job and outside activities. They may limit the amount of time you can spend on outside projects or even require written approval from your employer before you begin.
Before starting any side venture or dedicating professional time to your own startup, carefully review your employment contract. The terms you’ve signed may prohibit you from working on external projects or building your own business while employed.
Non-Solicitation Clause: A non-solicitation clause restricts employees from engaging with their employer’s clients or other employees for a specified period after leaving the company. This is designed to prevent employees from taking the employer’s customers or talent to a new venture or competing business.
Non-Compete Clause: Non-compete clauses prohibit employees from working for a competitor or starting a similar business for a specified period after leaving their employer. Like non-solicitation clauses, these provisions aim to protect the employer’s customer base and human resources from being systematically diverted to competing ventures.
Regardless of the nature of your new business, carefully review your employment contract’s non-compete clause before starting your own project.
Non-compete clauses are only enforceable within the legal framework they are subject to. Under Turkish Labor Law, here are the key limitations that apply to such clauses:
Time Limitations: According to Turkish Labor Law, non-compete clauses can only remain valid for a maximum of 2 years after the employee has left the employer. Exceeding this time limit may render the clause legally unenforceable.
Geographic Scope: The geographic scope of non-compete clauses must be reasonable. Typically, the restriction should only apply to regions where the employee could directly compete with their former employer or where the employer operates.
Fairness and Proportionality: Non-compete clauses must not impose an excessive restriction on the employee’s ability to find new work or continue their professional activities. Overly restrictive clauses that disproportionately limit the employee’s freedom are likely to be deemed invalid under the law.
Intellectual Property
Most companies protect their “secret recipes” by including clauses on intellectual and industrial property in their employment contracts. In many cases, this isn’t even necessary. Under Turkish intellectual property laws, any work, design, or invention created by an employee during working hours or using the employer’s resources is automatically considered the property of the employer.
For example, if you work at a software company, any code you write during working hours will likely belong to your employer. However, determining ownership isn’t always so straightforward. Proving whether work was done during business hours or outside of them—or whether the employer’s tools were used—can be a complex and murky process.
Things change significantly if you’re working under a freelance contract (eser sözleşmesi).
If there’s a creative product, the owner is the person (or people) who created it.
For example:
• If you and a friend write a song together, you both share ownership of that song.
• If a group of developers builds a bug-free app collaboratively, each developer has ownership rights to the app.
However, in the absence of a formal employer-employee relationship, such as when work is outsourced to a freelancer, the intellectual property rights for the product generally belong to the creator. Even if you were paid for the work, the rights to the product remain yours unless you explicitly transfer them through a properly executed written agreement upon delivery.
This means no one can force you to hand over the rights to a brilliant product you created as a freelancer—unless you’ve already signed an agreement committing to do so.
That said, refusing to transfer ownership could lead to other consequences, such as refunding payments received or compensating the client for “lost time.”
Freelance contracts (eser sözleşmeleri) often include clauses that impose certain obligations on you. Here are three key ones to watch for:
Confidentiality Clauses. These clauses prohibit you from disclosing any trade secrets, client lists, or other confidential information you learn during the project. Violating confidentiality—intentionally or accidentally—by sharing “confidential” information with third parties could lead to serious legal consequences. Always review confidentiality clauses carefully, especially if you plan to leverage any of the project’s learnings for your own startup.
Intellectual Property Assignment Clauses. These clauses obligate you to transfer all intellectual property rights related to your creative output to the client upon project completion through a written agreement. Failing to transfer these rights while under such an obligation could result in significant financial or legal consequences for you.
Use of Employer Resources. Many employment and freelance contracts include clauses restricting the use of employer-provided resources (such as phones, computers, and software) for personal purposes. Using employer tools to work on your own startup could lead to disciplinary action or even termination.
Additionally, if you use employer-provided resources to create something for your startup, your employer may have a claim to ownership of the resulting intellectual property. This could lead to major legal disputes that jeopardize your startup’s future.
It’s possible for an employee to unknowingly build their startup—and their dreams for the future—on intellectual property that legally belongs to their employer.
Now, imagine your startup becomes wildly successful. At that point, it wouldn’t be surprising for your employer to show up at your door with lawsuits demanding millions of dollars in damages.
For this reason, it’s critical for any aspiring founder to be fully aware of these risks and to “button up their shirt correctly” from the very beginning. Careful planning and legal foresight can make all the difference.
Take Your Steps Carefully
If we had to give a simple yes or no answer to whether you can start a business while keeping your current job, it would likely be “no.” Considering the potential risks outlined above, the safest course of action would be to resign from your current position before diving into a new venture.
While launching your startup while still employed may seem like a safer and more appealing option in some respects, especially in scenarios where you’ll operate in a similar industry, it’s important to understand that this can expose you to conflicts of interest and other legal challenges. As such, stepping away from your current job before starting your new business is always the most secure path.
However, life is rarely black and white. If you wish to keep your current job while pursuing your startup, you’ll need to tread carefully. With professional legal guidance, you should thoroughly review the following aspects of your employment or freelance agreement:
Understanding whether you are allowed to conduct outside activities and what the limitations are.
Understanding how your non-solicitation clause limits whom you can work with.
Understanding how your non-compete clause limits the type of work you can do.
Understanding what is (and is not) considered the company’s confidential information.
Understanding what is (and is not) considered the company’s inventions.
Understanding how you should use (or not use) company resources.
These are just a few of the critical points to evaluate if you decide to keep your current job while launching your startup. If you need assistance navigating this complex situation, feel free to contact us here.
21/12/24
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