Legal Hacks! How To Protect Your Business, Even From Employees

Non-compete clause – protect your business even from employees

The process of negotiations between the employer and the employee before the conclusion of the employment contract can be a painstaking and long process. A frequent stumbling block in those negotiations is the non-competition clause (the “Clause“).

WHAT IS the Non Compete Clause?

The Clause is an article in the employment contract that determines which jobs the employee should not perform independently or with another employer outside of the employment contract. The Clause necessarily defines the time period of the ban, as well as the amount of compensation that the employer must pay to the employee in the name of the Clause.

In this way, employers try to protect their business interests, all at the expense of the employee’s freedom of work. Precisely because of the opposition of these two interests, which must be brought into balance, the Clause is contracted.

WHEN CAN the Non Compete Clause BE NEGOTIATED?

The employer enters the Clause into the employment contract if there are conditions for the employer’s employee to acquire:

  1. new, particularly important technological knowledge;
  2. a wide circle of business partners;
  3. or to learn important business information and secrets.


The Clause can be stipulated either in the employment contract or in an annex to the employment contract.


The general act of the employer or the employment contract also determines the territorial validity of the Clause, depending on the type of work to which the prohibition applies.

It is usual for the Clause itself to list the countries where the employer has clients.

IS THE DURATION OF the Non Compete Clause LIMITED?

The duration of the Clause in the employment relationship can be negotiated:

  1. for the period during employment;
  2. for the period after termination of employment.

The validity of the Clause can be extended to a period after the termination of the employment relationship if two conditions are met:

  1. That such prohibition does not last longer than 2 years;
  2. That the employer pays the employee monetary compensation (because he continues to comply with this obligation) in the amount determined by the employment contract.


It is very important to draw up the Clause correctly, and to list exactly which jobs the employee must not perform, so that this institute is not misused by the employer.

WHAT IF THERE IS A BREACH OF the Non Compete Clause?

If the employee violates the Clause, the employer may unilaterally terminate the employment contract, if the violation of the Clause is provided as a reason for termination, and the employer certainly has the right to demand compensation from the employee.

On the other hand, if the employer does not pay the agreed compensation to the employee on the basis of the Clause after the termination of the employment relationship, there will be no ban on the employment of the employee in accordance with the provisions of the Clause.

It is interesting that in case of illegal unilateral termination of the employment contract by the employer, the Clause will not produce legal effects, even though it was contracted.

P.S. Bearing in mind that the Clause represents a limitation of the freedom of work, when contracting the Clause it is very important to consult the applicable legislation and current legal practice in order to ensure the fulfillment of all legal requirements for its validity.

For more information on this or any other legal, tax or business topic, feel free to write to us at [email protected] at any time or call us at phone number +381113281914 every working day from 08:30 to 16 :30.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analysing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your AK STATT representative or other competent legal counsel.

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