Judgment of Supreme Court

Chamber of Labour Law, Social Insurance and Public Affairs

28 March 2002

Case No. I PKN 6/01

Non-compete clause

Occurrence of condition dissolving non-compete clause

Term of non-competition agreement

Permissibility of non-compete clause with managerial employees

1. Effective termination of a non-competition agreement does not require that the employee be given a separate written notice of termination. It is sufficient to provide a declaration on fulfilment of the relevant condition. If the employee filed notice of termination of the employment contract, then, upon termination, the condition dissolving the non-compete clause has occurred. If future contingent events occur as provided for in the agreement, as a dissolving condition, dissolution results from the very occurrence of the condition, and thus without the need to submit additional declarations.

2. An agreement not to compete after the end of the employment relationship (non-compete clause) is set up by the regulations to be an agreement for a specific term. The Labour Code does not provide for earlier unilateral termination by the employer. It may thus be terminated before the end of the stated term only if the parties agreed, when entering into the agreement, that it could be terminated unilaterally, or if during the period of non-competition they agree to end it.

3. There is no prohibition on entering into a non-compete clause, or agreement not to compete after the end of the employment relationship, with managerial employees (Labour Code Art. 101[2] & 101[4]; former Act on Business Activity Art. 25c & 25d).