Trade Secret
A trade secret comprises information that is not generally known or readily accessible, has economic value, and is reasonably protected by the employer (restricted access, labelling, confidentiality agreements).
The employer should clearly define in employment contracts or internal acts what is considered a trade secret, limit access to key information to those who strictly need it, and regularly inform employees of their confidentiality obligations.
Non-Compete During Employment
Under Article 39 of the Employment Relationships Act (ZDR-1), during the term of employment an employee may not, without the employer’s written consent, perform for their own or a third party’s account any business that falls within the scope of the activities the employer actually performs or is expanding into, and which would constitute competition to the employer.
This means that the prohibition applies directly by law, even if the employment contract does not contain a specific non-compete clause. Any breach may result in the employee’s liability for damages and disciplinary measures.
Non-Compete Clause After Termination of Employment
Under Article 40 of ZDR-1, the employee and the employer may agree in writing on a non-compete clause that applies after termination of employment. Key features:
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it may apply for a maximum of two years after termination of employment,
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it must be proportionate in terms of time, territory, and scope of activities,
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the employer must pay the employee financial compensation in return for the restriction,
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it must not unduly restrict the employee’s future employment opportunities.
If the employer fails to pay the compensation, the non-compete clause ceases to apply. In certain cases, it may also be reduced or annulled by a court.
Conclusion
In practice, it is advisable to distinguish between the statutory non-compete obligation during employment and the contractual non-compete clause after termination, which must be accompanied by appropriate compensation. Clear contracts and internal rules reduce the risk of disputes between employers and employees.
