Sweden: Non-Compete Period Capped at 18 Months
Under a new collective bargaining agreement on non-compete clauses, the restricted period may not exceed 18 months past the last day of employment. The new rules will apply to non-compete clauses entered into by employers bound by it as of December 1, 2015. These are not applicable to non-solicitation or confidentiality clauses.
- All companies that rely on trade secrets are now eligible to use non-compete clauses, however, the use of non-compete clauses can only be used for certain positions.
- The restricted period may not exceed 18 months past the last day of employment. The previous agreement from 1969 allowed a maximum restricted period of 24 months,
- The restricted period may not exceed 9 months if the trade secret/s that are being protected have a short risk period/shelf life.
- The compensation for the loss of income during restriction period is capped at 60 percent of the employee’s monthly income.
- The employee must be paid during the entire restricted period for the restriction clause to remain valid.
- The compensation is dependent on the loss of income caused by the non-compete clause and the employee must try to mitigate the loss of income by actively applying for a new job.
- The penalty for each breach must not exceed six times the employee’s monthly income. Also, employers have the option to claim for recurring penalty for continuing breach by the employee.
The new Non-Compete Agreement is expected to be of significance for all employers irrespective of their being bound by a collective bargaining agreement. All employers should take note of the new provisions when creating employment contracts for their workforce in Sweden.
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