Non-Competition Clauses in Swedish Employment Contracts
Explore the evolution of non-competition clauses in Swedish employment contracts from 1969 to the 2015 collective agreement. Delve into the implications for employees with trade secrets, the role of customer relations, compensation structures, and unresolved issues surrounding non-competes.
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Presentation Transcript
Complements or alternatives to exclusive rights. Non-competition clauses in employment contracts a common understanding? Professor Bengt Domeij Juridiska fakulteten, Uppsala universitet
Collective agreements for non- competes in Sweden From 1969 non-competes only for employees with advanced technical trade secrets. Terminated by the Swedish employer federation in 2014. New collective agreement in 2015. All employees with trade secrets. Significant liberalization, but what does it mean?
2015 Swedish collective agreement issues Swedish Labour court has held that technical secrets or long-standing customer relations may warrant non-competes. But are an individual s customer relations trade secrets? Interpreted as max 9 months for business know-how and max 18 months for technical know-how.
Compensation 1969 agreement 60 % of final pay guaranteed. 2015 agreement 60 % of final pay if employee otherwise would have competed and was prevented from employment due to the covenant not to compete.
Swedish Labour Court case AD 2013 nr 24 no blue-penciling If the interest of the employer is in the customer relationships, a general non- compete is not allowed but only a restriction to continue with the customers of the employer. Employer limiting a non-compete after termination in order to create validity is not possible (against the will of the employee).
Some open issues Is promised compensation required for narrow or short non-competes, such as non-recruits? Is it justified to prevent a former employee to work with all the employer s customers or only customers with whom the employee has had a personal relationship?
Open issues Can investments in education justify non-competes? Is it justified to condition compensation to the employee by the effects the clause has had? Non-recruits after starting at a non- competitor company? I am critical of the 2015 collective agreement (liberalization) and believe that Sweden too should legislate.
