The case law of the Supreme Court of the Czech Republic has established that a non-compete clause agreed between an employer and an employee is valid only under specific conditions. Such a clause, under which an employee undertakes not to perform activities competing with their former employer after termination of employment, must meet certain legal requirements. The purpose of non-compete clauses is to protect employers from the leakage of sensitive information that could be used by competitors and significantly hinder their business activities.
According to the Labour Code, a non-compete clause may only be concluded with employees who, during their employment, have acquired such knowledge, information, and technological processes that, if misused after termination, could seriously endanger the employer’s business. This means that a non-compete clause is not a universal tool applicable to every employee. Its validity depends on whether the employee has gained knowledge that could genuinely provide a competitive advantage and make it more difficult for their former employer to operate.
The Supreme Court dealt with this issue in its decision of 19 December 2024 (case no. 21 Cdo 893/2024). The claimant argued that the defendant had acquired specific knowledge of technological procedures and that training in these procedures gave him an advantage which could be used by a competitor when setting up a similar business. However, the Court held that since the knowledge was publicly available and could be used by other competitors, it could not be considered a trade secret that would justify the validity of a non-compete clause.
While the importance of protecting employers against competition is emphasised, equal attention is paid to preventing the misuse of non-compete clauses to protect knowledge that is not exclusive to a particular employer. As the technological procedures at issue were publicly accessible (in this case, through the European VPI Maintenance Manual available for purchase by any competitor), the claimant could not validly conclude a non-compete clause with the defendant.
The purpose of a non-compete clause is thus to protect the employer from the disclosure of knowledge, insights, and technological processes that could provide a competitor with an advantage in the market. It is not intended to protect the craftsmanship or general experience of employees that they can use with a new employer.
