Rules concerning contractual clauses

On 1 January 2016, the rules on clauses were changed and you can get an overview of them here. If you entered into a clause before this date, different rules apply, and we recommend that you contact us.
In general, a non-compete clause is an agreement between you and your employer and it ensures that you do not compete against your employer after the employment relationship has ended.

A non-compete clause entails the following:

• You may not take up employment and/or have a financial interest in a competing company. For example, if you are employed by a bank, you cannot be employed by another bank or have a financial interest in a competing company for a certain period after you have resigned.
• You also may not start your own business if the business will be in competition with you former employer, nor may you otherwise perform work for a competitor, e.g. via consultancy.
• However, you are welcome to take up employment with or perform work for your current employer’s customers after your resignation. However, the requirements are that customers are not at the same time competitors and/or you are also subject to one.

The terms for non-compete clauses are:

1. The employee has a “particularly trusted position”,
   such that by virtue of your position you must have access to the company’s confidential information such as accounts, price lists and customer lists etc. This must be knowledge acquired as a result of the position and that you could use to the detriment of the employer.
2. The employer explains in writing why the employee has a “particularly trusted position”.
3. The employee has been employed for a minimum of six months.
4. The employee is compensated for the non-compete clause.
   The non-compete clause is valid for a maximum of 12 months after the time of resignation.
5. The information in sections 1) – 4) are provided in writing, possibly as an addendum to the employment agreement

If just one of the conditions of validity is not met, the clause is invalid and does not apply to you, and you will therefore not receive compensation for the clause.

You are entitled to compensation for the months in which you are bound by a valid non-compete clause. The competition depends on the duration of the clause and whether you find new suitable work. “Suitable work” must be understood as work within the professional field in which you are trained or have worked.

The compensation is calculated as a percentage of your salary:

This is the legal minimum compensation provided by law, and we therefore recommend that you try to negotiate a higher level of compensation than the one you see above.

The calculation basis for the compensation is your fixed predictable salary, i.e. basic salary, pension, bonus, fixed allowances and the value of a free car, phone etc.

The compensation for the first two months of the clause period is called a one-off fee. You are entitled to be paid this compensation at the latest when you resign, and you are always entitled to it – unless you have been justifiably dismissed.

You must be aware that you have a “duty to limit losses” throughout the entire clause period, i.e. you must limit your former employer’s losses to the maximum extent possible.

You are therefore obliged to actively look for other “suitable work”.

If you do not comply with the duty to limit losses, you lose the right to compensation for the clause.

However, the one-off fee is not conditional on you actively looking for other suitable work.

The non-compete clause only comes into force if you resign yourself, or if the company terminates or instant dismisses you if you have given reasonable cause for this.

If your employer terminates you without you yourself having given cause for your employment to end, the non-compete clause lapses. For example, this could be if you are dismissed due to the company’s circumstances. Even if the clause has lapsed, in this situation you will still to be entitled to the one-off fee of two months’ compensation.

If you resign your position yourself, you are bound by the non-compete clause. However, this does not apply if your termination is due to your employer’s breach of contract, e.g. non-payment of salary.

Both while you are employed and after you have resigned your position, your employer can unilaterally terminate the non-compete clause with one month’s notice until the end of the month. If this happens, you are no longer bound by the clause and are no longer entitled to compensation.

However, you are entitled to the one-off fee of two months’ compensation if you resign within six months after your employer has terminated the clause.

Non-solicitation clause is an agreement between an employee and his/her employer to the effect that after termination, the employee may not take up employment with or directly or indirectly have any commercial contact with customers and other business connections of his/her previous employer.

On the other hand, you may be employed in a competing company unless the company is also a customer.

The following conditions must be true for the clause to be valid:

1. It must be clear from the clause that it concerns customers with whom the employee has had a business relationship within the last 12 months before termination.
2. The employee must have been employed for at least six months.
3. The employee must be compensated for the customer clause.
4. The customer clause applies for a maximum of 12 months after the time of resignation.
5. The information in points 1-4 must be provided in writing.

In addition to these conditions, your employer must provide a list of customers with whom you have had contact in the past 12 months.

All conditions of validity must be met. If just one of the conditions is not met, the clause is invalid and does not apply to you, and you will therefore not receive compensation for the clause.

You are entitled to compensation for the months in which you are bound by a valid customer clause. The compensation depends on the duration of the clause and whether you find new suitable work. “Suitable work” must be understood as work within the professional field in which you are trained or have worked.

The compensation is calculated as a percentage of your salary:

This is the legal minimum compensation, and we therefore recommend that you try to negotiate a higher level of compensation.

The calculation basis for the compensation is your fixed predictable salary, i.e. basic salary, pension, bonus, fixed allowances and the value of a free car, phone etc.

The compensation for the first two months of the clause period is called a one-off fee. You are entitled to be paid this compensation at the latest when you resign, and you are always entitled to it - unless you have been justifiably dismissed.

Please note that you have a “duty to limit losses” throughout the clause period.

You are therefore obliged to actively look for other “suitable work”, so that you limit your former employer’s loss as much as possible.

If you do not comply with the duty to limit losses, you lose the right to compensation for the clause.

However, the one-off fee is not conditional on you actively looking for other suitable work.

The customer clause applies whether you resign yourself or are terminated.

If you resign due to major breach of contract by your employer, the clause may lapse based on general principles of contract law.

Both while you are employed and after you have resigned your position, your employer can unilaterally terminate the customer clause with one month’s notice until the end of the month. If this happens, you are no longer bound by the clause and are no longer entitled to compensation. However, you are entitled to the one-off fee of two months’

If you are subject to a non-compete and a customer clause, the conditions for both types of clauses must be met. If the conditions are not fully met, neither of the clauses will be valid.

A combined clause can be valid for a maximum of six months after your resignation.

The compensation for a combined employment clause is calculated on the same basis as above and depends on whether or not you find new suitable work:            

You are subject to a duty to limit losses and have the same right to a one-off fee as described under the individual clauses.

If you are dismissed without giving reasonable cause for it, the non-compete clause will lapse, but the customer clause part will remain. In this situation, you will still be entitled to the one-off fee of two months’ compensation, as you are still bound by the customer clause. 

If you resign your position yourself, you are bound by the combined clause, unless you resign because of your employer’s major breach of contract.

Both while you are employed and after you have resigned your position, your employer can unilaterally terminate the combined clause with one month’s notice until the end of the month, and if so you will not be entitled to compensation.

However, you are entitled to the one-off fee of two months’ compensation if you resign within six months after the clause is terminated.