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Restrictive Covenants in Norway

1. Definition of Restrictive Covenants

Restrictive covenants are agreements restricting competition in employment relationships. The Working Environment Act differs between three different types of restrictive covenants.

2. Types of Restrictive Covenants

a. Non-Compete Clauses

Non-compete clause is an agreement between the employer and the employee limiting the employee’s freedom to take up a post at another employer or to commence, operate or participate in other undertakings following termination of the employment.

b. Non-solicitation of customers

Non-solicitation of customers’ clause’ is an agreement between the employer and the employee limiting the employee’s freedom to contact the employer’s customers following termination of the employment.

c. Non-solicitation of employees

Non-solicitation of employees’ clause’ is an agreement between the employer and other undertakings preventing or limiting the employee’s possibility of taking up an appointment in another undertaking.

3. Enforcement of Restrictive Covenants—process and remedies

Non-compete clause

A non-compete clause may only be invoked as far as is necessary in order to safeguard the employer’s particular need for protection against competition. The clause may not in any event be invoked for longer than one year from termination of the employment. In order to be valid, a non-compete clause must be entered into in writing. If a non-compete clause is invoked, the employer shall pay the employee compensation equivalent to 100 per cent of the employee’s salary up to eight times the National Insurance basic amount, and thereafter a minimum of 70 per cent of the employee’s salary in excess of eight times the National Insurance basic amount.

Non-solicitation of customers’ clause

A non-solicitation of customers’ clause may only apply to customers with whom the employee has had contact or for whom he has been responsible during the year immediately prior to the statement as referred to in the third paragraph. The clause may not in any event be invoked more than one year from termination of the employment.

Non-solicitation of employees’ clauses

The employer may not enter into a non-solicitation of employees’ clause. A non-solicitation of employees’ clause may nevertheless be entered into in connection with negotiations on transfer of undertakings, and invoked during the negotiations and for up to six months after completion of the negotiations if they do not succeed. A non-solicitation of employees’ clause may also be entered into from the date of transfer of the undertakings and invoked for up to six months if the employer has informed all the affected employees in writing.

For more information on these articles or any other issues involving labour and employment matters in Norway, please contact Storeng, Beck & Due Lund (SBDL)
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