What are the key types of restrictive covenants in your jurisdiction?
Non-competition, non-solicitation and non-disclosure clauses.
Does the employer have to pay compensation to the employee in relation to the restrictive covenants?
The employer is obliged to pay compensation for non-competition in the period following redundancy or termination of the employment relationship. The minimum amount of compensation amounts to 25% of the remuneration received by the employee before the expiry of the employment relationship for the period corresponding to the period of the prohibition on competition.
There are no provisions of law which stipulate compensation for non-competition in relation to other forms of engagement (except for agency agreements). Pursuant to recent court rulings such compensation is not necessary, however this view may change in the future, given that the courts' decisions in that regard were diverse throughout the years.
Are there limits to the post-employment restriction period and to the geographical area of the restrictive covenants?
There is no statutory limit for the post-contractual restriction period or area, but they should be defined in relation to the factual activity of the given company. If the time limit and geographical area are defined too broadly, the covenant will be partially invalid.
Can the employer unilaterally revoke the agreed restrictive covenant at the end of the contract or otherwise avoid its application?
The employer may unilaterally revoke the agreed restrictive covenants only if it is provided for in the agreement.
What remedies are available to the employer when an employee breaches their restrictions?
The employer has remedies which are defined in the restrictive covenants, which usually consist of: liquidated damages, reimbursement of compensation already paid. On top of contractual remedies there are also statutory ones. The employer may claim compensation based on provisions of labour law and civil law. The compensation covers damages incurred and lost profits. A violation of restrictive covenants may constitute an unfair competition act. The act of April 16, 1993 on combating unfair competition provides that the entrepreneur whose interest has been threatened or impaired, may demand:
- cessation of the impermissible acts;
- elimination of the effects of the impermissible acts;
- the making of a single or a series of statements with appropriate contents and in a proper form;
- repairing of the damage inflicted, according to general principles;
- release of unjust benefits according to general principles;
- ordering the payment of an adequate amount of money for a specific public purpose connected with supporting Polish culture or protection of national heritage;
- make publicly available the information about a judgment or its contents in a specified manner and to the specified extent - if unfair competition was culpable.
An act of unfair competition, e.g.violation of confidentiality of certain information may also constitute an offence and be prosecuted.
