Competition clauses are found in a number of European jurisdictions. Slovak legislation on post-employment non-compete clauses is characterized by: the obligation to agree on a non-compete clause in an employment contract, the possibility to agree on it only with a certain type of employee, time limitation, and remuneration.
Competition Clauses in an Employment Contract
After the amendment of the Labor Code in 2022, it is possible to conclude a simple employment contract with an employee with basic details and only inform the employee of other terms and conditions of employment by means of a so-called “information letter.” Within the limits of the Labor Code, the content of the information letter can be unilaterally changed and the employee’s consent is not required for the change. Many employers make use of the possibility of combining an employment contract with an information letter. However, the competition clause must be agreed upon in the employment contract with the employee directly – it is not sufficient to include it in the information sheet.
Acquired Knowledge
A competition clause cannot be concluded with any employee – it can only be with those who, during the course of employment, have the opportunity to acquire information or knowledge that is not normally available, and the use of which could cause the employer substantial detriment.
Time Limitation and Remuneration
The maximum duration of a non-compete clause is one year from the end of employment, but it can be agreed for a shorter period of time (there is no lower limit). The employer is obliged to provide the employee with reasonable monetary compensation of at least 50% of the employee’s average monthly earnings for each month of performance of the obligation. Compensation is normally payable on the employer’s monthly wages payday, but the employer and the employee may agree otherwise.
Withdrawal
According to the Labor Code, withdrawal by the employer is only possible during the duration of the employee’s employment.
There is little case law in Slovakia dealing with the competition clause or its withdrawal. However, a 2023 judgment of the County Court in Bratislava confirmed that an employer is entitled to withdraw from a non-compete clause at any time during the employment relationship, even on the last day of the employment relationship, and, importantly, without giving any reason. In the dispute, the employee challenged the invalidity of such withdrawal for failure to state a reason, for breach of good morals, and for breach of the principle of legal certainty. However, a competition clause is meant to allow an employer to protect itself against possible leaks of information to competitors. It is up to the employer whether or not to make use of this tool. Indeed, from an employee’s point of view, the possibility of resigning without giving a reason, even on the last day of their employment, may seem unfair if the employee, knowing of the existence of the competition clause, has adapted their search for a new job accordingly. The court held that the possibility to withdraw from the non-compete clause during the duration of the employment relationship could not be regarded as an abuse of rights. Interestingly, the employee also argued and referred to the case law of the Supreme Court of the Czech Republic, arguing that the withdrawal from the competition clause was invalid as it did not contain a reason for withdrawal. The County Court in Bratislava notes that it is not necessary to take into account the decisions of authorities of other states. The decision of the County Court in Bratislava is in accordance with the ruling of the Constitutional Court of the Slovak Republic No. 1/2012 where it stated that a competition clause can be withdrawn without a reason.
In contrast stands practice in the Czech Republic – e.g., a decision of the Supreme Court of the Czech Republic from 2020, in which a contract clause for withdrawal stated the employer could “if, in its discretion, it concludes that, in view of the value of the information, knowledge of working and technological procedures acquired by the employee in the course of employment with the employer or otherwise, it would not be reasonable or expedient for the employer to enforce the agreed non-compete against the employee.” The Czech court held that the agreed clause and the subsequent withdrawal based on it were absolutely void as contrary to law.
Conclusion
Competition clauses must be agreed upon in the employment contract and meet the legal requirements. It cannot be agreed gratuitously. In the Slovak Republic, competition clauses are primarily meant to protect the employer against competitors, and the employer is entitled to withdraw from the competition clause at any time during the employment relationship without giving any reason. In practice, it is not advisable to state a reason for withdrawal even if one exists.
By Jana Sapakova, Partner, Eversheds Sutherland
This article was originally published in Issue 11.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
