A non-competition clause under the Labour Code is nothing more than a contractually stipulated prohibition on an employee to engage in activities that are competitive to the employer’s business and also to provide work under an employment contract or other civil law contract for the benefit of an entity that also carries out competitive activities.

A non-competition agreement is a separate agreement, not a part of the employment contract (Judgment of the Supreme Court of 28.04.2010, file ref. I PK 208/09) and must be in writing, otherwise it is null and void. In accordance with the judgment of the Supreme Court of 12 September 2008. (ref. no. I PK 27/08), a competitive activity is such an activity of the employee which is addressed to the same circle of recipients and actually threatens the interests of the employer, even if it only partially overlaps with the activity of his employer with whom he was employed.

This type of contract may also apply after the termination of the employment relationship due to the employee’s access to important information, the disclosure of which could expose the employer to harm. This involves the payment of due compensation to the employee for compliance with the non-competion rule.

The non-competion rule as well as the concept of competitive activity itself is controversial, as the scope of the injunctions and prohibitions is unclear. Often, employees don’t know how to find themselves in a situation where this restriction still applies to them. On the other hand, the temptation to circumvent the ban and reap additional profits is sometimes very tempting.

A former employee of a travel agency found this out as he was ordered by the court to return the undue compensation he received from his former employer for refraining from competitive activities after the termination of his employment. As it turned out, he was supposed to run his own mother’s travel agency, a business in direct competition with his former employer. This was because there were positive comments on social media from satisfied customers and the address of the company’s headquarters, which was the same as the former employee’s residence. The court did not give credence to the explanation that it was only to help a parent and ruled that: “the lack of formal association with the company does not prove that the defendant did not actually engage in competitive activities. Even informal cooperation with a market rival can lead to a violation of the agreement” (judgment of 24.10.2023, ref. IX P 147/23).

The concept of non-competition is often used in contracts drafted by the law firm, not only in employment contracts. In order to ensure proper protection of our clients, especially business clients, we use the broad concept of Related Party in them.