Non-competition Clause pursuant to Labour Code

Provision of Section 310 Subsection 1 of the Labour Code enables the employer and the employee to negotiate a non-competition clause. The Supreme Court has recently issued a judgement (Reference Number 21 Cdo 506/2013) in which it expressed its opinion on concluding an agreement on a non-competition clause and its content.

Essential requirements of an agreement on non-competition clause are the consent of the employee to refrain for a certain period of time after termination of the employment from the performance of a gainful activity that would be identical with the employer's business activities or would compete with them, and the employer's obligation to provide the employee with an appropriate financial consideration.

In addition to this, a contractual penalty can be stipulated in a non-competition clause. According to the Labour Code, there are no other requirements for the non-competition clause. In compliance with the above mentioned judgement of the Supreme Court another requirements can be agreed by the participants in a non-competition clause, but it is necessary to keep in mind that the contractual rights and obligations have to be balanced.