Pursuant to the resolution of the Supreme Court of 27 October 2021, ref. III PZP 1/21, an agreement concluded between an investor intending to acquire shares in a company whose shareholders are employees and company trade union organisations operating in that company does not constitute a source of labour law as it is not based on a statute (Article 9 § 1 of the Labour Code).

Competitive activity of an employee after termination of employment.

On the other hand, Article 101² § 1 of the Labour Code states that the provision of Article 101¹ § 1 of the Labour Code applies accordingly when the employer and the employee who have access to particularly important information, the disclosure of which could expose the employer to harm, conclude a non-competition agreement after the termination of the employment relationship.

Thus, the non-competition agreement after the termination of the employment relationship should also be concluded in writing under pain of nullity. Such an agreement may only bind certain employees, namely those who have access to particularly important information, the disclosure of which could expose the employer to harm. A necessary element of such a contract is also the indication of compensation for the former employee, as well as the duration of the prohibition. The compensation cannot be lower than 25% of the remuneration received by the employee before the termination of the employment relationship for the period corresponding to the period of the non-competition clause; the compensation may be paid in monthly installments. Such a contract must be structured in such a way that the employee knows what his or her obligations are. The Polish Supreme Court  (Sąd Najwyższy) noted the above in its judgment of 3 December 2008, case ref. no. I PK 97/08, pointing out "In order to assess whether the scope of the competition prohibition was sufficiently specified, it may be of significance whether the manner of determining the scope of the prohibition allowed the former employee to determine - without excessive effort and on the basis of data available to him - the scope of obligations imposed on him by the competition clause.”

The prohibition of competition ceases to apply before the expiry of the period for which the agreement provided for in that provision was concluded, if the reasons justifying that prohibition cease to exist or if the employer fails to fulfill its obligation to pay compensation.

Read more in part one (https://lawyer-in-poland.com/179-obligation-of-an-employee-and-a-former-employee-to-refrain-from-activities-harmful-to-the-employer-prohibition-to-conduct-a-competitive-business-part-one) and three.

Ewa Kosowska-Czapla

Legal Adviser / Restructuring Adviser

Szczecin, 9.07.2019.

Pursuant to the provisions of Article 100 § 2 point 4-6 of the Polish Labour Code, an employee in Poland is obliged in particular:

- take care of the welfare of the workplace, protect its property and keep secret information, the disclosure of which could expose the employer to damage;

- observe the secrecy specified in separate regulations;

- observe the principles of social coexistence in the workplace.

Thus, the employee is bound by the general principle of loyalty to the employer and protection of his interests.

Competitive activity of the employee during the employment relationship.

Pursuant to the provisions of Article 101¹ § 1 of the Polish Labour Code, within the scope specified in a separate agreement, an employee may not conduct any activity competitive to the employer, or provide work within the employment relationship or on any other basis for the benefit of an entity conducting such activity (non-competition clause).

Considering the above, it should be assumed that, as a rule, an employee may conduct activities competitive to the employer. A non-competition clause applies only if a written non-competition agreement has been concluded. Therefore, an employer who would not like his employees to conduct competitive activity during their employment should sign a relevant agreement with them in this respect. Such an agreement should be properly constructed, inter alia, so that there is no doubt what activity is competitive and must be concluded in writing under pain of nullity. Additionally, such an agreement must be performed, i.e. the employer may not allow for running a competitive business. The Polish Supreme Court noted the above in its decision of 21 May 2014, ref. no. I PK 27/14 "Termination of employment contract (art. 45 § 1 KP) was unjustified and violated the principles of social coexistence (art. 8 KP), when, generally speaking, the employer allowed and tolerated the performance of medical work by rescuers in competitive entities (and sometimes even required it), and then, facing the need to reduce employment (no need for medical rescuers), used it as a reason for termination of employment relationship with the employee by notice, citing the non-competition agreement.”

 However, one should also remember about the principle of caring for the interests of the employer. According to the Polish Supreme Court judgment of 20 August 2009, II PK 41/09 "The determination of the scope of employee obligations is not the same as the conclusion of a separate non-competition agreement. Conducting competitive activity despite not concluding a non-competition agreement may violate the obligation to take care of the welfare of the workplace as defined in Article 100 § 2 point 4 of the Labour Code and constitute a justified reason for termination of the employment contract, or even a reason for immediate termination.” Thus, despite the fact that the parties do not have a non-competition agreement, an employee must observe general principles towards his employer, such as loyalty, honesty and taking care of his interests. Otherwise, the employee may be dismissed, and even the employer may claim compensation from the employee.

During the employment relationship, a provision enabling an employee to be held liable for damages may be a provision of Articles 114 and 122 of the Labour Code, according to which an employee who, as a result of non-performance or improper performance of employee obligations caused damage to the employer through his fault, is liable for material liability according to the principles set out in this chapter, if the employee intentionally caused damage, is obliged to repair it in its full amount. Thus, for example, intentional causing damage to the employer by persuading his customers - during the employment relationship - to move to a competitive company run by an employee may be associated with liability for damages.

Read more in part two.

Ewa Kosowska-Czapla

Legal Adviser / Restructuring Adviser

Szczecin, 6.06.2019.

Pursuant to the resolution of the Supreme Court of 27 October 2021, ref. III PZP 1/21, an agreement concluded between an investor intending to acquire shares in a company whose shareholders are employees and company trade union organisations operating in that company does not constitute a source of labour law as it is not based on a statute (Article 9 § 1 of the Labour Code).

Competitive activity of an employee after termination of employment.

On the other hand, Article 101² § 1 of the Labour Code states that the provision of Article 101¹ § 1 of the Labour Code applies accordingly when the employer and the employee who have access to particularly important information, the disclosure of which could expose the employer to harm, conclude a non-competition agreement after the termination of the employment relationship.

Thus, the non-competition agreement after the termination of the employment relationship should also be concluded in writing under pain of nullity. Such an agreement may only bind certain employees, namely those who have access to particularly important information, the disclosure of which could expose the employer to harm. A necessary element of such a contract is also the indication of compensation for the former employee, as well as the duration of the prohibition. The compensation cannot be lower than 25% of the remuneration received by the employee before the termination of the employment relationship for the period corresponding to the period of the non-competition clause; the compensation may be paid in monthly installments. Such a contract must be structured in such a way that the employee knows what his or her obligations are. The Polish Supreme Court  (Sąd Najwyższy) noted the above in its judgment of 3 December 2008, case ref. no. I PK 97/08, pointing out "In order to assess whether the scope of the competition prohibition was sufficiently specified, it may be of significance whether the manner of determining the scope of the prohibition allowed the former employee to determine - without excessive effort and on the basis of data available to him - the scope of obligations imposed on him by the competition clause.”

The prohibition of competition ceases to apply before the expiry of the period for which the agreement provided for in that provision was concluded, if the reasons justifying that prohibition cease to exist or if the employer fails to fulfill its obligation to pay compensation.

Read more in part one (https://lawyer-in-poland.com/179-obligation-of-an-employee-and-a-former-employee-to-refrain-from-activities-harmful-to-the-employer-prohibition-to-conduct-a-competitive-business-part-one) and three.

Ewa Kosowska-Czapla

Legal Adviser / Restructuring Adviser

Szczecin, 9.07.2019.

Pursuant to the provisions of Article 100 § 2 point 4-6 of the Polish Labour Code, an employee in Poland is obliged in particular:

- take care of the welfare of the workplace, protect its property and keep secret information, the disclosure of which could expose the employer to damage;

- observe the secrecy specified in separate regulations;

- observe the principles of social coexistence in the workplace.

Thus, the employee is bound by the general principle of loyalty to the employer and protection of his interests.

Competitive activity of the employee during the employment relationship.

Pursuant to the provisions of Article 101¹ § 1 of the Polish Labour Code, within the scope specified in a separate agreement, an employee may not conduct any activity competitive to the employer, or provide work within the employment relationship or on any other basis for the benefit of an entity conducting such activity (non-competition clause).

Considering the above, it should be assumed that, as a rule, an employee may conduct activities competitive to the employer. A non-competition clause applies only if a written non-competition agreement has been concluded. Therefore, an employer who would not like his employees to conduct competitive activity during their employment should sign a relevant agreement with them in this respect. Such an agreement should be properly constructed, inter alia, so that there is no doubt what activity is competitive and must be concluded in writing under pain of nullity. Additionally, such an agreement must be performed, i.e. the employer may not allow for running a competitive business. The Polish Supreme Court noted the above in its decision of 21 May 2014, ref. no. I PK 27/14 "Termination of employment contract (art. 45 § 1 KP) was unjustified and violated the principles of social coexistence (art. 8 KP), when, generally speaking, the employer allowed and tolerated the performance of medical work by rescuers in competitive entities (and sometimes even required it), and then, facing the need to reduce employment (no need for medical rescuers), used it as a reason for termination of employment relationship with the employee by notice, citing the non-competition agreement.”

 However, one should also remember about the principle of caring for the interests of the employer. According to the Polish Supreme Court judgment of 20 August 2009, II PK 41/09 "The determination of the scope of employee obligations is not the same as the conclusion of a separate non-competition agreement. Conducting competitive activity despite not concluding a non-competition agreement may violate the obligation to take care of the welfare of the workplace as defined in Article 100 § 2 point 4 of the Labour Code and constitute a justified reason for termination of the employment contract, or even a reason for immediate termination.” Thus, despite the fact that the parties do not have a non-competition agreement, an employee must observe general principles towards his employer, such as loyalty, honesty and taking care of his interests. Otherwise, the employee may be dismissed, and even the employer may claim compensation from the employee.

During the employment relationship, a provision enabling an employee to be held liable for damages may be a provision of Articles 114 and 122 of the Labour Code, according to which an employee who, as a result of non-performance or improper performance of employee obligations caused damage to the employer through his fault, is liable for material liability according to the principles set out in this chapter, if the employee intentionally caused damage, is obliged to repair it in its full amount. Thus, for example, intentional causing damage to the employer by persuading his customers - during the employment relationship - to move to a competitive company run by an employee may be associated with liability for damages.

Read more in part two.

Ewa Kosowska-Czapla

Legal Adviser / Restructuring Adviser

Szczecin, 6.06.2019.