Non-solicitation clause in IT contracts

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Non-solicitation clauses are often inserted into IT contracts (but not only). In a nutshell, it is an obligation of the other party to the contract (or a mutual obligation) not to employ the other party’s personnel. In the IT industry, this is of particular importance because the main “asset” that a software company has are its people (intellectual potential). No wonder, then, that entrepreneurs try to protect the constancy of their team at all costs.

Non solicitation and Polish law

The non-solicitation clause is not regulated by law anywhere. Non solicitation provisions are introduced into contracts under the freedom of contract set forth in the Civil Code.

Indirectly, one of the acts of unfair competition described in the Act on Combating Unfair Competition relates to the prohibition of hiring a contractor’s employees. According to this law, it is an act of unfair competition to induce a person providing work for an entrepreneur, on the basis of an employment or other legal relationship, to fail to perform or improperly perform his employment or other contractual obligations, with the aim of benefiting himself or third parties or harming the entrepreneur.

Polish law, therefore, does not define the prohibition of employment but defines the so-called solicitation or persuasion to change employment. This has important consequences for the creation of non-solicitation clauses in contracts concluded under Polish law.

Full prohibition of employment

In practice, the most common contractual provision is that the parties agree on a full ban on hiring the other party’s employees under the sanction of paying a contractual penalty. In all likelihood, a non-employment provision in this form will be invalid. Such invalidity has two aspects.

First, it violates the principles of social comity. Compliance with the principles of social intercourse is a component of the principle of freedom of contract set forth in the Civil Code. Parties entering into a contract may arrange the legal relationship as they see fit, as long as its content or purpose does not oppose the properties (nature) of the relationship, the law or the principles of social intercourse. In the jurisprudence of the courts, the position has been established that an agreement “behind the back” of employees prohibiting their employment is contrary precisely to the principles of social intercourse.

It is contrary to the principles of social coexistence and in conflict with the principle of freedom of labor, and thus considered to violate the right of individuals to choose their place of work and the nature of their employment, to apply restrictions in a contract between two business entities that impose an obligation to pay a contractual penalty on the one party that hires the other party’s employee (judgment of the Court of Appeals in Lodz, I ACa 136/98).

Second, as already indirectly implied above, such an absolute ban on hiring strikes and violates the rights of employees to take employment. By agreeing behind an employee’s (or co-worker’s) back that the other party will not be able to hire him or her, we deprive that person of his or her freedom to choose where to work. According to case law, the only option to effectively prevent a person from moving to a competitor or employer’s contractor is to sign a contract directly with that employee and not behind his or her back.

The only legally permissible way for an employer to protect itself against the risk of losing employees trained or upgrading their professional skills at the expense of the employing entity is to conclude an appropriate agreement with the employee (judgment of the Court of Appeals in Szczecin, I ACa 134/15).

Inducement to change employment

As I mentioned above, Polish law prohibits inducing an employee to terminate a contract with his current employer. This includes both those employed under an employment contract and any other civil law contract (e.g., a contract of mandate, a contract for specific work or a b2b cooperation agreement). The provision says explicitly that it is an act of unfair competition to solicit. So, is it about any proposal to change employment or any particular type of activity? As it turns out, simply making an offer of employment will not always be treated as an act of unfair competition.

Although the acquisition of employees of a competitor may sometimes take the form of an act of unfair competition, this should be narrowed down to such cases in which the competitor uses unfair methods (fraud, deceit, misrepresentation), or when the objective pursued is unfair. Mere solicitation of employees to change employment does not exhaust the elements of acts prohibited by the Act on Combating Unfair Competition (Judgment of the Court of Appeals in Białystok, I ACa 594/14).

The mere submission of a competitive offer to an employee or client of the entrepreneur does not yet constitute an inducement not to perform, or to perform improperly, or to terminate the contract, however, only if they are in accordance with good morals and the law, as well as with the principles of fair competition and freedom of economic activity. This is because a tort does not include behavior that is the result of a sovereign decision of an employee or other person performing work for an entrepreneur. Therefore, in order to determine that an act of unfair competition has occurred in a given situation, it is important to determine the circumstances in which such actions occur, i.e. whether the termination of a contract (of employment or other legal relationship, the content of which is the provision of work for a specific entity – the entrepreneur) is the result of inducement by a third party or an autonomous decision (judgment of the Court of Appeals in Krakow, I ACa 1024/12).

An effective and safe non-solicitation clause

So how do you approach this topic in a safe and, above all, legally effective way? There are several solutions here:

  • First of all, you can prohibit a contractor from making offers of employment to its employees in situations where this is not done on the employee’s initiative,
  • You can sign non-compete agreements with your employees,
  • You can formulate the non-solicitation clause as it is described in Article 12 of the Law on Combating Unfair Competition – i.e., prohibiting solicitation of changes in employment.
  • You cannot prohibit the employment of your employees in a situation where it is the employees who, on their own initiative, want to change jobs and you do not have a non-competition agreement signed with them.