Parties to an employment relationship may,
pursuant to Articles 1011 – 1014 of the Labour Code
Act of 26 June 1974 (Journal of Laws 2014.1502, as
amended; hereinafter: “Labour Code”), enter into
a non-competition agreement. A clause to that
effect may be incorporated in the employment
contract or constitute a separate instrument. The
parties may ban competition for the time when
they remain bound by an employment relationship
and thereafter. The essence for having the non-
competition clause to survive the end of the
employment relationship is that the employee is
bound not to undertake competing activities in
relation to their employer after the employment
relationship is terminated, within the scope and for
the time stipulated in such non-competition
agreement, while the employer is bound to pay the
employee specific compensation in this regard.
While, in accordance with Article 231 of the Labour
Code, in the event that an employer business or its
part is transferred to another employer, the latter
becomes, by operation of law, a party to the
existing employment relationship. This article
transposes Article 3 of Directive 2001/23/EC of 12
March 2001 on the approximation of the laws of the
Member States relating to the safeguarding of
employees’ rights, in the event of transfers of
undertakings, businesses or parts of undertakings or
businesses. Transfer of an employing business to
another employer may take place as a result of, for
example, a lease agreement being concluded for or
of the inheritance of the business. However, the
most common example of such transfers is the sale
of a business. On the date of transfer of the
employer business or its part, the transferee
assumes all the rights and obligations of the
transferor, and becomes a party to any
employment relationships with the employees.
Such effect occurs by operation of law, that is
without the need to take any actions. Bearing in
mind the provisions of Articles 1011 – 1014 and
Article 231 of the Labour Code, the question arises
if the new employer continues to be bound by non-competition
agreements
concluded
by
its predecessor?
In its judgment issued on 11 February 2015 in case
no. I PK 123/14, the Supreme Court held that Art.
231 of the Labour Code provides for automatic
accession by a new employer to the existing
employment relationship but not to the generality
of legal relationships binding the employer and the
employee. Therefore, in order to determine
whether or not the non-competition agreements
concluded by the previous employer are binding on
the new employer, it needs to be clarified if a non-
competition agreement continues to form a part of
the said relationship after the employment
relationship is terminated. This issue was clearly
resolve by the Supreme Court in the cited
judgment. In the opinion of the adjudicating panel,
non-competition agreements are not part of an
employment relationship once the previous
relationship has been terminated. This view has
been accepted by legal scholars and confirmed by
the resolution of the Supreme Court issued on 6
May 2015 in case no. III PZP 2/15.
Therefore, in accordance with legal scholars and
the established case-law of the Supreme Court, the
new employer who takes over an employer business
together with its employees is not bound by non-
competition agreements concluded with these
employees by the previous employer. In light of the
above, an employer taking over an employer
business or its part should keep in mind that if it
wants the employees transferred to be bound by a
non-competition clause after their previous
employment relationship has been terminated, it
needs
to
conclude
new
non-competition
agreements with them.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
ul. Nowogrodzka 11
00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Skarbowców 23a
53-125 Wrocław
Tel. +48 71 780-3100
Fax +48 71 780-3101
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary of
certain recent legal developments of selected areas of law. For this reason the information contained in this publication should not form the basis of
any decision as to a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual
cases. The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant legislation or other
legal development to the particular facts can be verified.