The non-compete clause prevents a potential competitive conflict of interests which could happen between a former employer and former employee. The non-compete clause is an agreement between an employer and an employee containing contractual agreement, which enables to prevent misuse of the information the employee obtained during the employment at the employer.
The content of the agreement is thus an obligation of the employee to refrain from being involved in gainful activities that would be similar to the former employer´s business activity or competitive in nature for a certain period of time after termination of the employment. The employer, on the other hand, undertakes to provide the employee with adequate monetary compensation for each month the obligation is observed.
The non-compete clause must be agreed in writing and may be agreed anytime during the employment. Therefore, we suggest not to hesitate with the conclusion of the clause and to conclude the clause before the employee may obtain confidential information of the employer. At the time the new employee obtains the confidential (for the employer) information, the employer may find himself in a risk situation that the employee will not conclude the clause – as the employee may be restricted when choosing a new employer for a maximum period of one year after possible termination of the employment.
The Labour Code enables both the employer and the employee to withdraw from the concluded non-compete clause. Therefore both the employer and the employee may withdraw from the non-compete clause, but only in case the reasons to withdraw are established by the law, or directly agreed by the contractual parties (i.e. the employer and the employee). We will inform about the reasons to withdraw from the non-compete clause next time.
In addition, the employee has a right to withdraw from the non-compete clause when the employer is in delay with the payment of the monetary compensation (or its parts) and when the employer is in delay with the payment for the particular month even 15 days after the due date.
The commitment of the parties is cancelled from the beginning by a valid withdrawal.
Regarding the right to withdraw from the non-compete clause, under the Labour Code the employer may withdraw from the clause only during the employment. Thus, the employer cannot withdraw from the clause after the termination of the employment. Such withdrawal would be invalid. Unlike the employee who is entitled to withdraw even after the termination of the employment. The possibility to cancel the non-compete clause by the employer at the time when the employee´s employment is finished and when he should receive negotiated monetary compensation is excluded.
Although the language of the law says the right of the employer to withdraw from the clause lasts until the termination of the employment, that is until the last day when the employee is at work (e.g. until the last day of the employee´s notice period), it is necessary to carefully consider the timing of the possible withdrawal.
It is necessary to draw attention to possible complications and inconvenience with the delivery of the written withdrawal to the employee, if it is done at the last minute before the termination of the employee´s employment. In addition, the jurisprudence demonstrated its attitude towards the employer´s withdrawal from the non-compete clause during the notice period very clearly (and negatively).
The labour law is based on the protection of an employee, and if it advantages one of the contractual parties in particular provisions, it is always the employee.
The employee, whose employment is about to finish under the current conclusion of the non-compete clause, is extremely limited and disadvantaged by respecting the clause when looking for a new employment.
We personally experienced cases when the employer, during the notice period, admitted he is no longer interested in the non-compete clause, as the confidential information obtained by the employee is no longer high-risk for his business. Thus, the employer is no longer interested in the negotiated obligation of the employee, and also the employer does not want to fulfil the monetary obligation towards the employee. Even if such reason was contracted in the non-compete clause for the possibility of the withdrawal, the employer´s withdrawal from the non-compete clause during the notice period creates a significant risk of failure of such act.
The notice period is a period which serves the employee to negotiate a new employment and when the employer hesitates to withdraw from the non-compete clause (in an extreme case to the end of the notice period), the employee may hardly change the newly negotiated employment respecting the non-compete clause, or more precisely to quickly negotiate a new employment. The Supreme Court handled cases (and the Constitutional Court supported the decision practice of the Supreme Court) when the withdrawal happened at the end of the period notice. The Supreme Court arbitrated that such acting of the employer is far from the legal certainty of the participant – employee, and found the employer´s procedure to be in contrary to accepted principles of morality. And thus the withdrawal from the non-compete clause is not valid.
In other words, the employee´s protection was preferred to the freedom of contract of the participants of the contractual parties.