Non-Compete Agreements Under Polish Labour Law

When hiring key personnel, particularly those with access to sensitive information or who have built significant client relationships, foreign companies might consider using non-compete agreements in Poland. These agreements aim to protect your business interests by restricting an employee’s ability to work for competitors or start a competing business after their employment with you ends. However, Polish law places specific limitations on the enforceability of such clauses.

What is a Non-Compete Agreement?

A non-compete agreement (often referred to as a “zakaz konkurencji”) is a contractual clause between an employer and an employee that restricts the employee’s professional activities after the termination of their employment. These restrictions typically involve:

• Working for a competitor: Preventing the former employee from taking a job with a company that directly competes with your business.
• Starting their own competing business: Restricting the former employee from setting up a business that offers similar products or services.
• Geographical scope: Defining the specific geographical area where these restrictions apply.
• Duration: Specifying the length of time the restrictions will be in effect after the employment ends.

Key Legal Requirements for Enforceability

Under Polish Labour Law, for a non-compete agreement to be legally binding, it must meet certain conditions:

• Separate Written Agreement: The non-compete clause must be part of a separate written agreement, distinct from the main employment contract (although often signed at the same time).
• Access to Particularly Important Information: The employee must have had access to particularly important information for the company, the disclosure of which could cause significant harm to the employer. This is a key element, and the agreement is less likely to be enforceable for employees who did not have access to such information.
• Specified Duration: The agreement must specify the period for which it will remain in effect after the termination of employment. The legally permissible duration depends on the type of employment contract:
  • For fixed-term contracts, the non-compete period cannot exceed the duration of the employment.
  • For indefinite contracts, the non-compete period cannot exceed two years.
• Compensation: If the non-compete agreement is in effect after the employment ends, the former employee must be entitled to financial compensation from the former employer for the duration of the restriction. The law does not specify a fixed amount, but it should be reasonable in relation to the scope of the restriction and the potential loss of earnings for the employee.

Compensation After Termination

The obligation to pay compensation to the former employee during the term of the non-compete agreement is a critical aspect of its enforceability under Polish law. If the agreement does not provide for such compensation, it is likely to be deemed invalid. The compensation is typically paid in monthly installments.

Enforcement of Non-Compete Agreements

If a former employee breaches a valid non-compete agreement, the former employer can seek legal remedies, such as demanding that the employee cease the prohibited activity and potentially claim damages for any losses incurred due to the breach.

Important Considerations for Foreign Companies

When considering implementing non-compete agreements in Poland:

• Assess the need: Determine which roles genuinely require such protection due to access to critical information or client relationships.
• Draft clear and specific agreements: Ensure the agreement clearly defines the scope of the restriction (activities, geographical area, duration) and the compensation to be paid.
• Provide fair compensation: The level of compensation should be reasonable and reflect the limitations placed on the former employee’s ability to earn a living in their field.
• Seek legal advice: Due to the specific legal requirements and limitations, it is essential to consult with a Polish legal professional to draft and implement enforceable non-compete agreements.

Non-compete agreements can be a useful tool for protecting your business interests in Poland, but they must be carefully constructed to comply with the strict requirements of Polish Labour Law. A poorly drafted or overly broad agreement is unlikely to be enforceable.