Hamilton Perspectives Nyhetsbrev

New rulings regarding non-solicitation clauses in employment agreements

After the end of an employment, a for­mer employee is ge­ne­ral­ly al­lo­wed to en­gage in com­pe­ting bu­si­ness or ta­ke up employment with a new com­pe­ting employer. However, restricti­ve co­ve­nants such as non-com­pe­te clau­ses and non-so­li­ci­ta­tion clau­ses could so­me­ti­mes be used in employment agre­e­ments to restrict employe­es’ com­pe­ting and recrui­ting ac­ti­vi­ti­es af­ter the ter­mi­na­tion of an employment. By me­ans of a non-so­li­ci­ta­tion clau­se, a for­mer employee can be pro­hi­bi­ted to so­li­cit custo­mers and to recruit employe­es or con­sul­tants.

It has pre­viously be­en un­clear un­der which cir­cumstan­ces a non-so­li­ci­ta­tion clau­se could be too li­mi­ting for the for­mer employee, and the­re­fo­re de­e­med not to be re­a­so­nab­le. The Swedish Labour Court (Sw. Arbetsdomstolen) has re­cent­ly ru­led on two dif­fe­rent ca­ses, in which the Court decla­red non-so­li­ci­ta­tion clau­ses unen­for­ce­ab­le.

The Swedish Labour Court de­ci­sions (AD 2018 no. 61 and AD 2018 no. 62)

Three for­mer employe­es of the vi­deo ga­me de­ve­lo­per MachineGames star­ted new employments with a com­pe­ting employer, Bad Yolk. The for­mer employe­es’ employment agre­e­ments con­tai­ned a non-so­li­ci­ta­tion clau­se, by which they we­re restric­ted to employ, recruit or so­li­cit employe­es from their for­mer employer du­ring a pe­ri­od of 24 mont­hs following the ter­mi­na­tion of their employments. MachineGames sought for an in­te­rim me­a­su­re – a pro­hi­bi­tion un­der pe­nal­ty of a fi­ne – against the for­mer employe­es and Bad Yolk. Uppsala District Court (Sw. Uppsala tings­rätt) gran­ted in­te­rim in­jun­c­tions, which we­re la­ter ap­pe­a­led to the Swedish Labour Court.

The re­a­so­ning of the Swedish Labour Court

The Swedish Labour Court de­e­med the non-so­li­ci­ta­tion clau­se not re­a­so­nab­le, and con­se­quent­ly set asi­de the district court’s de­ci­sions. In its de­ci­sions, the Swedish Labour Court ma­de the following as­sess­ments. A ne­ces­sa­ry con­di­tion for gran­ting an in­te­rim in­jun­c­tion, is that the ap­pli­cant can show pro­bab­le cau­se for the claim. The court as­ses­sed that the non-so­li­ci­ta­tion clau­se was not li­mi­ted to employe­es at MachineGames which the for­mer employe­es pre­viously had worked with, or who had a cer­tain pro­fes­sio­nal com­pe­tence. Furthermore, the clau­se did not on­ly restrict the for­mer employe­es to ac­ti­vely try to recruit employe­es from MachineGames, but al­so restric­ted them to recruit employe­es who volun­ta­rily con­tac­ted them re­gar­ding new employments. Under the­se cir­cumstan­ces, the Swedish Labour Court con­clu­ded that MachineGames had not shown pro­bab­le cau­se for its claim.

Furthermore, the for­mer employe­es had ter­mi­na­ted their employments se­ve­ral mont­hs (6, 15 and 18, re­specti­vely) pri­or to the da­te of the Swedish Labour Court’s de­ci­sions, and thus, MachineGames’ le­gi­ti­ma­te in­te­rest had al­re­a­dy decre­a­sed to such an ex­tent that it could not be de­e­med re­a­so­nab­le to uphold the non-so­li­ci­ta­tion restric­tions.

In Conclusion – A restricti­ve vi­ew on non-so­li­ci­ta­tion clau­ses

In its de­ci­sions, the Swedish Labour Court ex­pres­ses a restricti­ve vi­ew on non-so­li­ci­ta­tion clau­ses, sin­ce the­se could en­tail an­ti-com­pe­ti­ti­ve ef­fects equal to the ef­fects of a non-com­pe­te clau­se. Further, the de­ci­sions show the im­por­tan­ce of a le­gi­ti­ma­te li­mi­ta­tion of a non-so­li­ci­ta­tion clau­se. A re­mark would be not to ge­ne­ral­ly in­clu­de non-so­li­ci­ta­tion clau­ses in all employment agre­e­ments, but rat­her ap­p­ly it for a smal­ler range of employe­es un­der cer­tain cir­cumstan­ces. If the employer would in­clu­de a clau­se that is too restricti­ve or that is ap­pli­ed on all employe­es, the­re is a risk that the en­ti­re clau­se may be de­e­med vo­id.