WHEN EXECUTING LAWYERS ACTIVITY AS WELL AS TAKING CARE ABOUT CONDUCT IN HIS PRIVATE LIFE, A LAWYER IS OBLIGED TO PROTECT RESPECT AND TO STRUGGLE FOR PROMOTION AND AFFIRMATION OF LEGAL PROFESSION AS AN INDEPENDENT PROFESSION. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO ACT IN HUMAN WAY, RESPECTING DIGNITY OF ALL HE CONTACTS WITH. THEN, HE IS OBLIGED TO PRESERVE HIS HONOUR, MORAL CHARACTER, INDEPENDENCE AND EXPERTNESS IN ORDER TO STIMULATE OTHERS WITH HIS CONDUCT. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO RESPECT TRUTH AND LEGALITY, INDEPENDENCE OF LEGAL PROFESSION IN ACCORDANCE WITH THE CONSTITUTION AND LAWS. A LAWYER IS OBLIGED TO ENERGETICALLY REJECT ALL TRIES OF INFLUENCE ON HIS INDEPENDENCE IN EXECUTION OF ACTIVITY. HE IS OBLIGED TO INFORM ORGANS OF THE BAR ASSOCIATION ABOUT THESE TRIES. EXECUTION OF ANY COMMERCIAL OPERATIONS, ASSOCIATION OFLAWYERS OFFICES WITH ACTIVITIES OF SUCH EFFECT, I.E. ACTIVITIES THAT DO NOT GIVE LEGAL AID ARE INCOMPATIBLE WITH EXECUTION OF LAWYERS ACTIVITY. OBLIGATION OF A LAWYER IS TO BE CONSTANTLY UNDER PROFESSIONAL IMPROVEMENT, TO READ PROFESSIONAL LITERATURE,PARTICIPATE IN ALL PROFESSIONAL DISCUSSIONS, CONSULTATIONS, AND CONGRESSES, IN ALL ACTIONS OF LEGAL PROFESSIONS BY WHICH IMPROVEMENT AND AFFIRMATION OF THIS SERVICE ARE ACHIEVED, AND TO IMPROVE HIS GENERAL EDUCATION. A LAWYER HAS TO HELP WITH HIS PROFESSIONAL KNOWLEDGE OTHER LAWYERS, AND HE IS ESPECIALLY OBLIGED TO HELP PROFESSIONAL TRAINING OF LAW CLERKS IN LEGAL PROFESSION. A LAWYER IS OBLIGED TO GIVE LEGAL AID TO A CLIENT FOR WHICH HE KNOWS THAT IS NOT IN POSITION TO PAY FOR SERVICE, OR A CLIENT THAT IS ASSIGNED TO HIM ACCORDING TO THE SCHEDULE DETERMINED BY AUTHORIZED ORGAN OF THE BAR ASSOCIATION, I.E. OTHER ORGANIZATION ACCORDING TO THE DECISION OF THE BAR ASSOCIATION, AND THE BAR ASSOCIATION BEARS THE COSTS. IT IS NOT APPROPRIATE THAT A LAWYER IS A PERSON THAT ACTS AGAINST INTERESTS OF LEGAL PROFESSION AND WHO DOES NOT RESPECT RULES OF THIS CODE. WHEN EXECUTING LAWYERS ACTIVITY AS WELL AS TAKING CARE ABOUT CONDUCT IN HIS PRIVATE LIFE, A LAWYER IS OBLIGED TO PROTECT RESPECT AND TO STRUGGLE FOR PROMOTION AND AFFIRMATION OF LEGAL PROFESSION AS AN INDEPENDENT PROFESSION. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO ACT IN HUMAN WAY, RESPECTING DIGNITY OF ALL HE CONTACTS WITH. THEN, HE IS OBLIGED TO PRESERVE HIS HONOUR, MORAL CHARACTER, INDEPENDENCE AND EXPERTNESS IN ORDER TO STIMULATE OTHERS WITH HIS CONDUCT. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO RESPECT TRUTH AND LEGALITY, INDEPENDENCE OF LEGAL PROFESSION IN ACCORDANCE WITH THE CONSTITUTION AND LAWS. A LAWYER IS OBLIGED TO ENERGETICALLY REJECT ALL TRIES OF INFLUENCE ON HIS INDEPENDENCE IN EXECUTION OF ACTIVITY. HE IS OBLIGED TO INFORM ORGANS OF THE BAR ASSOCIATION ABOUT THESE TRIES. EXECUTION OF ANY COMMERCIAL OPERATIONS, ASSOCIATION OF LAWYERS OFFICES WITH ACTIVITIES OF SUCH EFFECT, I.E. ACTIVITIES THAT DO NOT GIVE LEGAL AID ARE INCOMPATIBLE WITH EXECUTION OF LAWYERS ACTIVITY. OBLIGATION OF A LAWYER IS TO BE CONSTANTLY UNDER PROFESSIONAL IMPROVEMENT, TO READ PROFESSIONAL LITERATURE, PARTICIPATE IN ALL PROFESSIONAL DISCUSSIONS, CONSULTATIONS, AND CONGRESSES, IN ALL ACTIONS OF LEGAL PROFESSIONS BY WHICH IMPROVEMENT AND AFFIRMATION OF THIS SERVICE ARE ACHIEVED, AND TO IMPROVE HIS GENERAL EDUCATION. A LAWYER HAS TO HELP WITH HIS PROFESSIONAL KNOWLEDGE OTHER LAWYERS, AND HE IS ESPECIALLY OBLIGED TO HELP PROFESSIONAL TRAINING OF LAW CLERKS IN LEGAL PROFESSION. A LAWYER IS OBLIGED TO GIVE LEGAL AID TO A CLIENT FOR WHICH HE KNOWS THAT IS NOT IN POSITION TO PAY FOR SERVICE, OR A CLIENT THAT IS ASSIGNED TO HIM ACCORDING TO THE SCHEDULE DETERMINED BY AUTHORIZED ORGAN OF THE BAR ASSOCIATION, I.E. OTHER ORGANIZATION ACCORDING TO THE DECISION OF THE BAR ASSOCIATION, AND THE BAR ASSOCIATION BEARS THE COSTS. IT IS NOT APPROPRIATE THAT A LAWYER IS A PERSON THAT ACTS AGAINST INTERESTS OF LEGAL PROFESSION AND WHO DOES NOT RESPECT RULES OF THIS CODE. WHEN EXECUTING LAWYERS ACTIVITY AS WELL AS TAKING CARE ABOUT CONDUCT IN HIS PRIVATE LIFE, A LAWYER IS OBLIGED TO PROTECT RESPECT AND TO STRUGGLE FOR PROMOTION AND AFFIRMATION OF LEGAL PROFESSION AS AN INDEPENDENT PROFESSION. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO ACT IN HUMAN WAY, RESPECTING DIGNITY OF ALL HE CONTACTS WITH. THEN, HE IS OBLIGED TO PRESERVE HIS HONOUR, MORAL CHARACTER, INDEPENDENCE AND EXPERTNESS IN ORDER TO STIMULATE OTHERS WITH HIS CONDUCT. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO RESPECT TRUTH AND LEGALITY, INDEPENDENCE OF LEGAL PROFESSION IN ACCORDANCE WITH THE CONSTITUTION AND LAWS. A LAWYER IS OBLIGED TO ENERGETICALLY REJECT ALL TRIES OF INFLUENCE ON HIS INDEPENDENCE IN EXECUTION OF ACTIVITY. HE IS OBLIGED TO INFORM ORGANS OF THE BAR ASSOCIATION ABOUT THESE TRIES. EXECUTION OF ANY COMMERCIAL OPERATIONS, ASSOCIATION OFLAWYERS OFFICES WITH ACTIVITIES OF SUCH EFFECT, I.E. ACTIVITIES THAT DO NOT GIVE LEGAL AID ARE INCOMPATIBLE WITH EXECUTION OF LAWYERS ACTIVITY. OBLIGATION OF A LAWYER IS TO BE CONSTANTLY UNDER PROFESSIONAL IMPROVEMENT, TO READ PROFESSIONAL LITERATURE,PARTICIPATE IN ALL PROFESSIONAL DISCUSSIONS, CONSULTATIONS, AND CONGRESSES, IN ALL ACTIONS OF LEGAL PROFESSIONS BY WHICH IMPROVEMENT AND AFFIRMATION OF THIS SERVICE ARE ACHIEVED, AND TO IMPROVE HIS GENERAL EDUCATION. A LAWYER HAS TO HELP WITH HIS PROFESSIONAL KNOWLEDGE OTHER LAWYERS, AND HE IS ESPECIALLY OBLIGED TO HELP PROFESSIONAL TRAINING OF LAW CLERKS IN LEGAL PROFESSION. A LAWYER IS OBLIGED TO GIVE LEGAL AID TO A CLIENT FOR WHICH HE KNOWS THAT IS NOT IN POSITION TO PAY FOR SERVICE, OR A CLIENT THAT IS ASSIGNED TO HIM ACCORDING TO THE SCHEDULE DETERMINED BY AUTHORIZED ORGAN OF THE BAR ASSOCIATION, I.E. OTHER ORGANIZATION ACCORDING TO THE DECISION OF THE BAR ASSOCIATION, AND THE BAR ASSOCIATION BEARS THE COSTS. IT IS NOT APPROPRIATE THAT A LAWYER IS A PERSON THAT ACTS AGAINST INTERESTS OF LEGAL PROFESSION AND WHO DOES NOT RESPECT RULES OF THIS CODE. WHEN EXECUTING LAWYERS ACTIVITY AS WELL AS TAKING CARE ABOUT CONDUCT IN HIS PRIVATE LIFE, A LAWYER IS OBLIGED TO PROTECT RESPECT AND TO STRUGGLE FOR PROMOTION AND AFFIRMATION OF LEGAL PROFESSION AS AN INDEPENDENT PROFESSION. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO ACT IN HUMAN WAY, RESPECTING DIGNITY OF ALL HE CONTACTS WITH. THEN, HE IS OBLIGED TO PRESERVE HIS HONOUR, MORAL CHARACTER, INDEPENDENCE AND EXPERTNESS IN ORDER TO STIMULATE OTHERS WITH HIS CONDUCT. WHEN EXECUTING LAWYERS ACTIVITY, A LAWYER IS OBLIGED TO RESPECT TRUTH AND LEGALITY, INDEPENDENCE OF LEGAL PROFESSION IN ACCORDANCE WITH THE CONSTITUTION AND LAWS. A LAWYER IS OBLIGED TO ENERGETICALLY REJECT ALL TRIES OF INFLUENCE ON HIS INDEPENDENCE IN EXECUTION OF ACTIVITY. HE IS OBLIGED TO INFORM ORGANS OF THE BAR ASSOCIATION ABOUT THESE TRIES. EXECUTION OF ANY COMMERCIAL OPERATIONS, ASSOCIATION OF LAWYERS OFFICES WITH ACTIVITIES OF SUCH EFFECT, I.E. ACTIVITIES THAT DO NOT GIVE LEGAL AID ARE INCOMPATIBLE WITH EXECUTION OF LAWYERS ACTIVITY. OBLIGATION OF A LAWYER IS TO BE CONSTANTLY UNDER PROFESSIONAL IMPROVEMENT, TO READ PROFESSIONAL LITERATURE, PARTICIPATE IN ALL PROFESSIONAL DISCUSSIONS, CONSULTATIONS, AND CONGRESSES, IN ALL ACTIONS OF LEGAL PROFESSIONS BY WHICH IMPROVEMENT AND AFFIRMATION OF THIS SERVICE ARE ACHIEVED, AND TO IMPROVE HIS GENERAL EDUCATION. A LAWYER HAS TO HELP WITH HIS PROFESSIONAL KNOWLEDGE OTHER LAWYERS, AND HE IS ESPECIALLY OBLIGED TO HELP PROFESSIONAL TRAINING OF LAW CLERKS IN LEGAL PROFESSION. A LAWYER IS OBLIGED TO GIVE LEGAL AID TO A CLIENT FOR WHICH HE KNOWS THAT IS NOT IN POSITION TO PAY FOR SERVICE, OR A CLIENT THAT IS ASSIGNED TO HIM ACCORDING TO THE SCHEDULE DETERMINED BY AUTHORIZED ORGAN OF THE BAR ASSOCIATION, I.E. OTHER ORGANIZATION ACCORDING TO THE DECISION OF THE BAR ASSOCIATION, AND THE BAR ASSOCIATION BEARS THE COSTS. IT IS NOT APPROPRIATE THAT A LAWYER IS A PERSON THAT ACTS AGAINST INTERESTS OF LEGAL PROFESSION AND WHO DOES NOT RESPECT RULES OF THIS CODE.

Prohibition on competition and non-competition clause

It often happens in practice that employers and also employees cannot tell the difference between the meaning and the consequences of the prohibition on competition and the non-competition clause. Therefore it also happens that these institutes are wrongfully used in the employment contracts, the consequence being that there is no obligation on the part of employee at least as regards the non-competition clause.

 

The prohibition on competition and the statutory prohibition of competitive activity are regulated in Article 39 of the Employment Relationships Act (hereinafter referred to as “ZDR-1”) which sets out that the employee shall not on his own or third party account carry out activities or enter into transactions falling within the scope of activity actually carried out by the employer and which present or could present a competition to the employer, without prior written consent. Therefore, a right of the employer is determined in this connection to claim compensation from the employee for the damage caused by the employee due to his action, namely within three months from the day on which he found out about carrying out of such activity or entering into such transactions or no later than within three years after the completion of such activity or entering into such transaction. As this is the case of statutory prohibition of competitive activity, there is no need to separately define this prohibition in the employment contract and in should also be pointed out that this prohibition applies only during the period of work relationship.

 

But the meaning of the non-competition clause on the other hand is completely different. The latter shall namely be exclusively agreed between the employer and the employee in writing and applies for the period after the termination of work relationship. To sum up the provisions of the ZDR-1 defining the non-competition clause in Articles 40 to 42, the following conditions must be fulfilled for its validity and for the incidence of obligation of both contracting parties:

 

  1. The non-competition clause must be agreed in writing together with the indemnification for respecting it;
  2. The non-competition clause must be determined with reasonable time limitations for the prohibition of competition, namely for maximum two years after the expiration of the employment contract;
  3. The non-competition clause must not exclude the possibility of an adequate employment of the employee;
  4. The employee must obtain in his work certain technical, manufacturing and commercial knowledge as well as business connections;
  5. The work relationship must end with an agreement between the contracting parties, due to ordinary termination by the employee, ordinary termination to the employee for reasons of culpability on his part or due to extraordinary termination to the employee by the employer (the ZDR-1 exempts the reason when the employee rejects the transfer or the actual performance of work at the employer-transferee).

 

Proving the infringement of non-competition clause can be very difficult in some cases as all of the conditions indicated above must be fulfilled and solid evidence must also exist. Whether the infringement of non-competition clause has in fact taken place, shall be judged considering the circumstances of each individual case, whereby instructions may mainly be found in the case-law developed in this field through the years.

13 August 2013