Denmark has recently adopted several new rules governing restrictive covenants in employment. Originally introduced as Bill 196 in April 2015 by Employment Minister Jorn Neergaard Larsen, implementation was delayed for several months due to the calling of a general election until finally being passed in December. With the new rules, which took effect on January 1st, Denmark has opted to take a decidedly pro mobility stance by sharply limiting the use of restrictive covenants in order to make it easier for employees to change jobs. In terms of content, under the new guidelines, employers may no longer restrict other employers and current/previous employees from soliciting away other employees. The new rules will apply to all employees whose contracts contain restrictive covenants, including managing directors.
Similarly, the changes also prohibit new agreements with non-hire clauses and will invalidate existing non-hire clauses over the next five years. Exceptions to these prohibitions are allowed in the case of current and future collective agreements however.
While the new rules seek to promote mobility, trade secret and confidentiality protections are still allowed. Companies may continue to use non-solicitation and non-competition clauses in their contracts, but the changes set tight requirements for such restrictions. Specifically, non-competition agreements are only valid for employees holding positions of “very particular trust.” Additionally, while employers may continue to prohibit the solicitation of customers, such clauses can only cover customers with whom the employee has had a business related contact in the 12 months prior to notice of termination. Non-solicitation and non-competition clauses will only be enforceable after an employee has completed six months of employment. Similarly, such clauses will only be enforceable for up to 12 months after the end of the employment relationship. As with the new employee mobility standards, the non-solicitation and competition clauses took effect January 1, 2016.
