The effectiveness of a non-competition clause in an employment contract requires its substantiation

The provisions of art. 101¹-101⁴ of the Labor Code is regulated by the employee’s prohibition of conducting competitive activity against his employer during the employment relationship or after its termination. As follows from art. 101¹ § 1 of the Code of Civil Procedure the non-competition clause also includes the employee rendering work to a competitive entity on the basis of an employment contract or other legal relationship resulting, inter alia, from civil law contracts, such as a work contract or mandate contract.

However, the provisions of the Labor Code do not contain legal norms that would specify the aforementioned prohibition of competition, including the concept of „competitive activity”. Therefore, when preparing a non-competition clause, the theses formulated in the jurisprudence of the Supreme Court should be taken into account.

In the light of the above, it should be noted that in the Supreme Court’s judgment of 13 December 2018, reference number Act: I PK 182/17, it was stated that „types of prohibited activities and the scope of prohibited competitive activities should be specified (specified) in the non-competition agreement concluded by the parties in writing.” A contractual provision establishing a prohibition of competition may not be limited to „invoking the general statutory formula or to refer generally to the subject of the employer’s business”. At the same time, the degree of specificity of the prohibition of competition after termination of employment may be different depending on the job position of the former employee during the period of employment with the former employer and, therefore, what access he had to particularly important information.

Consequently, when analyzing the prohibition of competition, one should first of all consider the fact that the former employee had the opportunity „without undue effort and based on the data available to him” to determine the scope of obligations that were imposed on him by this clause. An employee cannot be left by the employer in uncertainty as to the extent of his non-competition obligations.

It should be borne in mind that the subject of business activity of an entrepreneur entered in the Register of Entrepreneurs of the National Court Register or in the Central Register and Information on Economic Activity – the employer may include such types of business activities that are not actually carried out by the entrepreneur, which will raise doubts about background scope of the ban on competition. Similar doubts may arise in a situation in which an entrepreneur actually deals with many branches of the economy. In such a situation, the question arises whether the non-competition clause will apply only to those industries with which the employee had direct contact in the performance of his duties, or all related to the employer.

The above considerations support the need for careful and precise formulation of contractual clauses referring to the prohibition of competitive activity, because otherwise they may be considered ineffective, which will result in the employer’s claims not being considered by the court examining the dispute on the grounds of violation of the prohibition of competition.

The regulation of the prohibition of competition in view of the laconic nature of the provisions of the Labor Code was left to the freedom of the parties as part of shaping the content of the employment contract or the content of a separate non-competition agreement. Therefore, it should be remembered that the clause should be specified in concrete terms, which may include on the definition in the contract of the concept of „competitive activity”, or on listing the list of economic entities subject to non-competition, the degree of specificity required requires taking into account the individual circumstances of the employee and depends on the job position.