Restrictive Covenants in Denmark

1. Definition of Restrictive Covenants

Restrictive Covenants are defined in the Danish Act on Restrictive Employment Clauses. A non-competition clause is defined as a provision prohibiting an employee from doing business or taking up employment in competition with the employer’s business. Non-competition clauses are only valid if they are agreed upon with an employee defined as an “exceptionally entrusted employee”.

A non-solicitation of customer clause is defined as a provision preventing the employee from engaging himself in business with customers or other business relations with whom the employee has rendered services during the last 12 months before the point in time when the employee was dismissed.

With effect from 1 January 2016, non-solicitation clauses regarding non-solicitation of employees are not allowed.

2. Enforcement of Restrictive Covenants—process and remedies

The enforcement of restrictive covenants typically involves an employer’s claim for compensation and/or a claim for an agreed penalty. Furthermore, the employer might request that the employee cease work in a way not allowed under the agreed restrictive covenants.

The employer might consider requesting Danish courts to issue an injunction to protect his interests following from the non-compete and non-solicitation clauses.

3. Use and Limitations of Garden Leave

Under Danish legal practice, imposing garden leave on an employee means that the employer irrevocably has renounced the employee’s duty to work during his/her notice period.

For more information, please contact L&E Global.
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