The non-compete clause is a relatively widespread institute in the Czech legal environment. Its purpose is to prevent employees, usually senior employees or employees who have access to the employer’s manufacturing, marketing or other know-how, for a certain period of time after the termination of their employment from carrying out activities in which they could use such know-how to compete with their former employer.
Pursuant to the Labor Code, the employer may only withdraw from the non-compete clause during the employment relationship, and the Labour Code does not lay down any other conditions of withdrawal by the employer. However, the case law of the Supreme Court has introduced several prohibitions in this regard. It was first inferred that the employer may not withdraw from the non-compete clause without reason even if this was explicitly agreed in the non-compete clause. In subsequent decisions, the Supreme Court even states that the proper reason for the employer’s withdrawal from the non-compete clause is not the fact that the employee did not come into contact with the employer’s internal know-how which the employee could use after termination of employment, because this fact may only be assessed by the employer and it is therefore the same case as for withdrawal without reason.
Recently, the Constitutional Court has also commented on the aforementioned approach of the Supreme Court in one of its judgments, which declared the general prohibition of withdrawal from the non-compete clause by the employer to be an inadmissible judicial completion of the law and found it unconstitutional.
This judgment therefore opens up the possibility for employers to validly withdraw from the non-compete clause without reason or because the employee did not come into contact with know-how that could be used by the employee in a competitive position (i.e. the non-compete clause effectively lost its purpose) if so agreed in the clause. However, it should be borne in mind that employees will continue to be protected against the employer’s arbitrariness in possible judicial proceedings concerning non-compete clauses, for example, if the employer withdraws from the non-compete clause only a few days before the termination of employment. Courts will therefore have to deal with the specific circumstances of the case in proceedings, not only refer to the general prohibition of withdrawal from the non-compete clause by the employer inferred by the previous case law of the Supreme Court.
