Protection of trade secrets, non-compete and non-compete clauses for performing work

Employment relationship – starting point

An employment relationship arises when an employee voluntarily participates in the employer's organized work process, for payment, personally and continuously performs work according to the instructions and under the supervision of the employer - even if a written contract has not been concluded, but all the elements are present. By signing an employment contract, the employee also accepts obligations regarding:

• protection of trade secrets,
• non-compete prohibitions (during the duration of the employment relationship),
• non-competition clauses (after termination of employment – ​​if agreed).

Trade secret

The Trade Secrets Act (ZPosS) stipulates that a trade secret includes undisclosed professional knowledge, experience and business information that:

• are not widely known or easily accessible in the relevant circles,
• have a market value,
• the holder has taken reasonable measures to keep them secret (internal documents, marking, restricted access).

For example, information that is public by law or data about violations of laws and good business practices cannot be considered a trade secret.

Protection of trade secrets according to ZDR-1

Regarding the definition of a trade secret, ZDR-1 refers to ZPosS; an employee:

• may not exploit trade secrets for personal gain,
• may not disclose them to third parties,
• is liable if he knew or should have known that it was a trade secret.

In the event of a breach of trade secrets, claims for damages , prohibition of further use of data and other claims under the ZPosS are possible (prohibition of disclosure, withdrawal of information, compensation for damages).

Non-compete clause (during the employment relationship)

A non-compete clause is a legal obligation under Article 39 of the ZDR-1. During the duration of the employment relationship, an employee may not, without the written consent of the employer:

• to perform work or conclude transactions for one's own or another's account ,
• which fall within the employer's activity,
• and constitute or could constitute competition to the employer.

This is a legal (mandatory) prohibition that applies automatically , even if it is not specifically stated in the contract.

Due to a violation, the employer may request the cessation of competitive activity and claim compensation for the damage caused , with general deadlines applying (3 months from notification, 3 years from the occurrence).

Non-compete clause (after termination of employment)

A non-compete clause is a contractual prohibition on engaging in competitive activities after the termination of an employment relationship. It is regulated by Articles 38–42 of the ZDR-1.

It can be concluded if the employee acquires technical, production, business knowledge or important business connections during work that could cause significant damage to the employer if the employee were to use them at a competing employer or in his own competitive activity. For a non-compete clause to be valid, it must:

• be in writing (usually in an employment contract),
• clearly define:
  • the content of the prohibition (what is a competitive activity),
  • temporal and territorial limitation ,
  • the amount of financial compensation ,
• the time limit must not prevent the worker from finding suitable employment , and may not last longer than 2 years after the termination of the employment relationship ,
• The compensation for compliance with the non-competition clause must amount to at least 1/3 of the employee's average salary in the last three months before the termination of the contract; if compensation is not agreed, the clause does not apply .

A non-compete clause can also be agreed in a fixed-term contract .

Author: Danijela Uran, RRA Koroška doo – SPOT Consulting Koroška