A non-compete clause restricts an employee or business partner from carrying out competing activity. During the term of employment it arises from the law, and the employee may not conduct business in the same field of activity without the employer's consent. After employment ends it applies only if a non-compete clause was agreed in the employment contract, and then subject to strict conditions: the restriction may last no more than one year, it must be proportionate to the nature of the information the employee had access to, and the employer must provide the employee with financial compensation in the amount set by law. Without compensation the clause is invalid. For business partners and suppliers, similar restrictions are negotiated contractually and are also assessed from the perspective of competition law. When drafting a clause, it is therefore worth considering whether the cost of the compensation matches the actual risk of the employee leaving for a competitor.
See also: NDA and confidentiality, Exit interview, Key account management.
