Non-Compete in Employment Law
The Labour Code regulates two types: during employment (Art. 101¹ LC) — effective upon signing, and post-employment (Art. 101² LC) — requires a separate agreement with compensation of min. 25% of salary for each month of the restriction.
Post-Employment Non-Compete — Requirements
Written form required for validity. Must specify scope (what activities are restricted), territory, period (typically 6-24 months) and compensation. No or below-minimum compensation — the clause still binds the employee, but the court will award the statutory minimum.
Non-Compete in B2B Contracts
B2B contractors aren't covered by the Labour Code. Non-compete is governed by the Civil Code — parties have full freedom, but a post-termination restriction without compensation may be deemed void (contrary to principles of social coexistence).
How to Structure an Effective B2B Non-Compete
Precise definition of competitive activity, limited territory, reasonable period (6-12 months), contractual penalty for breach (typically 3-6 months' remuneration), compensation for the restricted party (30-50% per month).
Enforcement — Practical Problems
Proving the breach, establishing damage amount, securing the claim. A contractual penalty eliminates the need to prove damage. An audit clause (right to verify compliance) increases effectiveness.
When Courts Invalidate Non-Competes
Overly broad scope (prohibiting all professional activity), disproportionate to the employer's actual interest, no post-termination compensation, gross disproportion between penalty and compensation.
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