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It is becoming increasingly common for employers and employees to enter into non-compete agreements at the commencement of employment. Such agreements will typically impose significant restrictions on an employee’s freedom of action. The rationale behind these agreements is generally to enable employers to protect their competitive position. At the same time, there is a policy objective of avoiding anti-competitive agreements that unnecessarily restrict labour market mobility and an individual employee’s freedom to change jobs.
Different types of restrictive covenants
With effect from 1 January 2016, a new Chapter 14A was introduced into the Norwegian Working Environment Act, regulating the use of restrictive covenants in employment relationships. The statutory provisions govern three types of restrictive covenants:
- Non-Compete Clauses (Section 14A-1). These are agreements that restrict an employee’s ability, following the termination of employment, to: take up employment with another employer; or establish, operate, or participate in another business or commercial activity.
- Customer non-solicitation clauses (Section 14A-4). These are clauses that restrict an employee’s ability to contact or solicit the employer’s customers after the termination of the employment relationship.
- Recruitment Clauses (Section 14A-6). These are agreements between an employer and another undertaking that prevent or restrict employees from accepting employment with another business.
In certain industries, so-called poaching clauses or employee non-solicitation clauses are also common. These clauses prohibit employees from recruiting or soliciting personnel from their former employer. This type of clause is not specifically regulated by the provisions of the new Chapter 14A of the Working Environment Act.
