Non-competes and protection against unfair competition

Non-compete covenants are amongst the most sophisticated contractual instruments in employment law today.

During the employment, any potential competitive activities by the employee will normally be regarded as a serious breach of the employee’s duty of  loyalty to the employer. With a non-compete clause, the employer is also able to prevent an employee from performing activities for a competitor or establishing a competitive business after the termination of the employment contract. A non-solicitation obligation means that the employee is not allowed to contact clients/customers/relations of the former employer for a certain period after the termination of the former employment relationship. Breach of a non-compete clause or a non-solicitation clause may be linked to a contractual penalty clause.

The validity of a non-solicitation clause and a non-compete clause is regulated by the Act relating to conclusion of agreements Article 36 and 38. The provisions apply both to labor agreements, purchase agreements and shareholder agreements.

If an employee violates a non-compete clause or a non-solicit clause, the employer may make use of two alternative legal instruments: A petition for a preliminary injunction to quickly stop the breach or a subsequent lawsuit with a claim for compensation for economic loss or compensation according to a contractual penalty clause.

We assist in designing non-compete clauses and non-solicit clauses, advise employees regarding the legality of such clauses, and assist both employers and employees in disputes concerning claims of breach of non-compete clauses and non-solicit clauses.