In certain situations, from the employer’s point of view, it is beneficial to limit the possibility of taking up additional work by its employees, e.g. for fear of physical fatigue of the employee, distraction related to other paid work, or due to personal limits on working time (e.g. . applicable to professional drivers or juvenile employees).
Currently, after the amendment to the Labor Code implementing the EU directive on transparent and predictable working conditions (2019/1152/EU), the employer, in principle, does not have the possibility to arbitrarily prohibit taking up other paid work.
As stipulated in the recently introduced Art. 261 of the Labor Code:
§ 1. An employer may not prohibit an employee from simultaneously remaining in an employment relationship with another employer or from simultaneously remaining in a legal relationship constituting the basis for the provision of work other than an employment relationship.
§ 2. The provision of § 1 does not apply:
- in the case specified in Art. 1011 § 1;
- if separate regulations provide otherwise.
From the above, it is prohibited to limit the possibility of additional employment. Does this mean, however, that the employer has no possibility of limiting employment? Well, no. Art. 26 1 §2 introduces a breach of the prohibition of restriction by introducing a non-competition agreement, regulated in Art. 101 1 of the Labor Code:
§ 1. To the extent specified in a separate agreement, the employee may not conduct activities that are competitive with the employer or provide work under an employment relationship or on another basis for an entity conducting such activities (non-competition ban).
§ 2. An employer who has suffered damage as a result of an employee’s violation of the non-competition clause provided for in the contract may seek compensation for this damage from the employee on the principles set out in the provisions of Chapter I, Section Five.
A non-competition agreement during the employment relationship must be concluded in writing under pain of nullity. There is no need for it to be concluded on a document other than an employment contract. It is enough for its provisions to be clearly separated from the employment contract and be in writing.
The existence of a non-competition agreement cannot be presumed from the mere fact of the existence of an employment relationship. Both relationships are distinct in nature.
The contract does not have to be paid. This means that the employee does not have to receive any consideration for the undertaking to refrain from engaging in gainful employment or other competitive activities. However, the parties may provide for such gratification.
It should be noted that such an agreement is not limited only to restricting the establishment of another employment relationship. There is no doubt that an employee’s own business activity may also be a competitive activity. To eliminate doubts, the scope of such activities should be specified in detail in the contract.
You should ask yourself whether the employee is obliged to sign such an agreement. The answer to this question is twofold.
Generally, the employee is not obliged to sign such an agreement. In a situation where a non-competition agreement appears at the time of concluding an employment contract, the employee may refuse to sign the non-competition agreement. However, the employer may make employment conditional on signing such an agreement. In case of refusal, an employment relationship will simply not be established.
The situation is slightly different in the case of an existing employment relationship. Here, too, the employee is not obliged to sign such an agreement. According to well-established case law, an employer may, however, terminate an employment contract with notice for reasons relating to the employee:
“Refusal to sign a non-competition agreement may constitute a just cause for terminating the employment relationship with notice.”
Judgment of the Supreme Court of February 12, 2013, II PK 165/12.
Finally, it should be added that even the absence of a non-competition agreement does not mean that the employee does not have any anti-competitive obligations towards the employer.
Pursuant to Art. 100 §2 section 4, the employee is obliged to take care of the good of the workplace, protect its property and keep secret any information the disclosure of which could expose the employer to damage.