Slovakia: non-compete clauses in employment
There is no rule in either the Labour Code or elsewhere that allows restrictions to be imposed on employees’ gainful activities for any reason after their employment has ended.
However, the Labour Code allows employees to be prohibited during employment (both during and outside working hours) from carrying on activities that are identical to those carried on by the employer.
Under the Labour Code, non-compete clauses are those prohibiting employees from performing competing activities during their employment. Generally, non-compete clauses are used to deter employees from competing with their employer either when working for a different employer or by setting up in business or undertaking work on their own account.
Under the Labour Code, employers can use restrictive covenants to protect their legitimate interests such as misuse trade secrets by employees for the benefit of its competitors. It may be unfair competition for employees to make unauthorised disclosure or use of trade secrets for a competing business for their own or another’s benefit in order to secure themselves or others a more favourable market position to the detriment of other competitors.
Non-compete clauses are generally only enforceable when they apply for the duration of employment, and their enforceability is not affected by the manner of termination. Breach of a non-compete clause during employment would constitute a disciplinary offence and grounds for dismissal.
An employer suffering loss resulting from the breach of a non-compete clause can claim damages. The period over which damages are assessed can be:
- three years, starting from the occurrence of the event from which the damage derived (the objective period)
- up to two years, starting from the time the injured party is informed about the loss and about the person responsible for it but ending no later than the end of the objective period (the subjective period)
- ten years from the occurrence of the event from which the damage derived, where the damage was caused intentionally
A non-compete clause in an employment contract that complies with the Labour Code can be enforced against any employee, regardless of the industry they work in or their status or position. The only circumstances in which a non-compete clause would not apply is where the employer has given the employee prior written consent to conduct a business activity that is identical to the employer’s.
However, lawyers and doctors may enter into non-compete clauses with the businesses to which they provide services. In this situation, doctors and lawyers are treated as businesses, so the clauses are regulated by the Civil Code, which governs competition between businesses as well as restrictions on competition within a business (ie by its statutory or supervisory board members and shareholders). Unlike the Labour Code, non-compete clauses under the Civil Code can continue after services have ceased to be provided to the business.
Non-compete clauses can also be used in innominate agreements, which are regulated under the Civil Code according to the principle of contractual freedom rather than as a particular type of contract.
Under the Civil Code, non-compete clauses must specify:
- the scope of the restricted activity
- an adequate period for which the restriction is in force
- the sanction for breach of the restriction
- the consideration to be provided by one party to the other for accepting the restriction
However, there is no clear support for this kind of non-compete clause under Slovak law, and we believe that it may not legitimately be included in employment contracts. In the event of dispute, the court would have to review the clause and decide whether or not to enforce it and order payment of the consideration due under it.
Law: Labour Code (Act 311/2001 Coll.) and Commercial Code (Act 513/1991 Coll.)
