HR professionals across Europe should closely track developments in employment and competition law that could restrict their ability to enforce non-compete clauses in employment contracts and implement no-poach agreements with competitors in future.
Scrutiny of these arrangements is advised at a time when the UK government is considering imposing an outright ban on, or statutory limits on the duration of, non-compete clauses, and the European Commission has raised concerns about the impact of no-poach agreements on competition in the labour market.
‘Non-compete’ clauses in contracts between employers and staff allow businesses to mitigate the risk that an ex-employee will bring its technology, confidential and proprietary information, customers or clients to a competitor after their employment ends.
Such clauses are commonly used in UK employment contracts to restrain employees from threatening their employer’s ‘legitimate interests’ for a certain period after their employment has come to an end. Typically, they prohibit an employee from going to work for a competitor or competing with an ex-employer or dealing with the former employer’s customers using knowledge gained during their prior employment for a certain period after leaving the business. These restrictions are enforceable where certain requirements are met, and they are regularly upheld by the UK courts.
Competition law does not apply to restrictive...
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