Non-competition clause – 21 Cdo 4394/2010

In this case, an employer concluded a non-competition clause with an employee, which expressly allowed the employer to unilaterally terminate the non-competition clause until the end of the employment. The Czech Supreme Court considered whether such an agreement is valid, i.e. whether the employer is entitled to unilaterally terminate the non-competition clause without giving any reason. The Supreme Court came to the conclusion that the employer may unilaterally terminate the non-competition clause until the end of employment only if it was agreed between both parties and only on the grounds of agreed reasons which do not constitute of an abuse of rights at the detriment of the employee. According to this interpretation, the employer cannot unilaterally terminate the non-competition clause for any reason or without giving a reason, even if this possibility was agreed upon with the employee. However, this case was ruled according to the “old” Labour Code (Act No. 65/1965 Coll.). It is not clear whether the Supreme Court would use this interpretation even in the case of the termination of a non-competition clause concluded according to the current, valid Labour Code (Act No. 262/2006 Coll.).

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