It is possible to attach a penalty to violation of certain articles of an employment agreement. In practice, a penalty is often attached to violation of a confidentiality, ancillary activities, and/or a non-competition clause.

A penalty clause must be agreed upon in writing.

It is important that a penalty clause is worded in such a way that it is clear that it concerns a choice between a penalty and claiming damages.

It is possible that a court will mitigate a penalty in legal proceedings.