Non-Compete Agreement

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We help with non-compete agreements

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A non-compete agreement refers to any contract and terms that temporarily restrict an employee's ability to work for a competitor or to establish a competing business. There must always be a particularly significant reason related to the employer's operations or the employment relationship for making a non-compete agreement.

The law related to non-compete agreements changed on January 1, 2022. All new employment contracts made during 2022 that include a non-compete clause or agreement are subject to the new law. According to the law, the employer must pay compensation to the employee for the restriction of competition. Additionally, non-compete agreements now have a minimum termination period of two months. It is important to understand that starting January 1, 2023, the new law applies to all existing non-compete agreements and terms.

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How the law changed

The employer always has a duty to pay compensation going forward. Employers must now always pay compensation for non-compete agreements. Note the exception: the obligation to pay compensation applies retroactively to non-compete agreements and terms made before January 1, 2022, only after the transition period ending on January 1, 2023.

The amount of compensation depends on the duration of the competition restriction period. The amount of compensation depends on the duration of the restriction period in the non-compete agreement. Compensation corresponding to 40 percent of the employee's salary must be paid for a restriction period of up to six months. If the restriction period exceeds half a year, the amount of compensation is 60 percent of the salary.

Non-compete agreements will now have a notice period. Going forward, non-compete agreements and terms will have a notice period, which is one-third of the duration of the competition restriction period, but at least two months. However, there is no right to terminate after the employee has terminated the employment contract.

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