Prohibition of competition in IT from an employee's perspective
The change of employer in it is not surprising or unusual and often occurs after the implementation of a specific project. To prevent other industry players from using certain solutions, companies often sign non-compete agreements with their employees. What do you need to know about them?
One of the most common contractual clauses in contracts with employees of the IT industry is the Prohibition of competition. This is an obligation on the part of the employee not to engage in activities in competition with his employer and may apply during the period of employment and even after its termination. This prohibition is in the form of both a standard contractual provision and a separate document (it is common practice to enter into a confidentiality agreement, which also includes provisions on competition).
What issues should an employee draw attention to when signing a non-compete agreement? Here you can define five basic principles:
1. Written form
Article 1013 of the labour code makes it clear that a non-compete agreement must be concluded in writing and must be declared null and void. This means that it is not enough if anti-competitive clauses appear, for example, in a collective agreement or even in the labour regulations.
2. Precise definition of the scope of the antitrust ban
Before a non-compete agreement is signed, the employee must find out what exactly this restriction will mean. The labour code does not prejudge what is an activity that can be considered competitive by the employer. It is for both parties to the agreement to define precisely the concept of competition and the scope of the prohibition in force.
The employee should draw attention to the fact that too broad a prohibition of competition will result, for example, in the inability to perform it activities even for entities that do not constitute any competition for the employer. From the point of view of both the employer and the employee, the identification of the industry and the contractual exclusion from the ban of entities with which the employee already cooperates and with which he still wishes to cooperate and has the consent of the employer seem to be crucial in this case.
3. Prohibition of competition during the employment relationship
The IT sector is largely based on offering customers innovative solutions, which often take a very long time to prepare and implement and are usually expensive. It is not surprising that employers protect their interests already at the stage of signing an employment contract with an employee, and the Prohibition of competition at this time is almost a standard solution in it. In fact, such a ban can apply to any employee, and especially those who have access to important information, the loss of which could expose the company to harm.
It is worth noting that some compensation for an employee subject to a ban on competition can be calculated in the salary, but it does not have to. In this case, everything depends on individual agreements between the parties, since there is no provision in the labor code that provides for any additional benefits for the employee under the contractual non-competition during the employment relationship.
4. Prohibition of post-employment competition
The situation is somewhat different in the case of a ban on post-employment competition. The labour code in Article 1012. § 1 specifies what should be included in such an agreement and with whom it may be concluded. This concerns workers who have access to particularly important information, the disclosure of which could expose the employer to harm. It is also necessary to determine the duration of the Prohibition of competition. Article 1012 (3) of the labour code provides that, for the duration of such a contract, an employee is entitled to compensation which may not be less than 25% of the salary received by that employee before the termination of the employment relationship. This compensation may be paid in monthly instalments.
It should be added here that article 1011 (2) provides that a non-compete agreement may cease to have effect when the reasons justifying such a prohibition cease to exist or the employer fails to comply with the obligation to pay compensation. However, according to recent jurisprudence, in the latter case the contract ceases to be valid employee, but not the employer. This means that if this employee takes up a competitive activity, he loses the right to compensation. However, the second option is permissible: the employee continues to refrain from competitive activities and thus retains a claim for compensation from the employer (judgment of the Supreme Court of 27 February 2013, II PK 176/12 and the final judgment of the District Court of Wrocław of 23 April 2015, ref. act VII pa 81/15).
5. Form of agreement
In the case of employees within the meaning of the labour code and persons employed under contract contracts, the rules on the obligation to pay and the precise definition of the duration of the anti-competitive agreement, as is apparent from the case-law, apply. It looks a bit different in the case of freelancers working with the company in the framework of their own business activities. More flexible forms of competition prohibition are then possible. Therefore, such contracts, even before they are signed, should be carefully examined in terms of duration and the determination of remuneration, given the lack of protection provided by labour law.
Finally, it is worth noting that the labour code does not specify in detail the consequences of a breach of the Prohibition of competition on the part of an employee. This should be clearly defined in the agreement and accepted by both parties.
Karol Koziel-president of the management board of K & amp; K business and legal consulting-a company engaged in the protection of intellectual property of enterprises.
A graduate of the Faculty of law and administration of the Jagiellonian University, he deepened his knowledge during his postgraduate studies modern technology law (PAN) (2013) and modern business services (Uth in Radom) (2014). He graduated from the summer law school on Intellectual property law (2013) and the summer law school on Business Law (2014) programmes organised by the University of Minho in Braga (Portugal). He gained professional experience in a law firm dealing with the protection of personal data and as legal director of the esky group. In the field of his practice, he specializes in: protection of consumer rights in the e-commerce market, the impact of legal changes on the conversion of internet services, almost new technologies, personal data protection, corporate services of enterprises.