Can an employer prohibit an employee from additional employment?

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Since the recent changes on April 26, 2023, employers can’t stop their employees from having another job. However, there’s a catch. If that other job is with a competing company, or if there are other specific rules about working elsewhere, then it’s a different story.

Before this update, there weren’t clear rules about having multiple jobs. Many companies were worried about their employees getting distracted, so they often didn’t let them work for others, especially during evenings or weekends.

The No-Compete Rule

According to legal rules, every employee should take care of the welfare of the workplace. That means taking care of company property and not sharing any inside information that could hurt the company.

There’s something called a “non-compete agreement”. Simply put, it’s an agreement saying that an employee won’t work for a competing company or start a similar business. This isn’t just for those who know big company secrets; anyone can be asked to sign one.

There’s no strict definition of what “competing” means. It’s up to the company and the employee to decide together. But generally, it’s about not doing anything that could be seen as a threat to the company. For instance, the employer might clearly state in the agreement what the employee can’t do once they leave.

What’s considered a threat? Here are some examples:

  • Working for a direct competitor.
  • Starting business deals with the company’s clients or team for personal gain.
  • Advising competing businesses.
  • Being part of the leadership in another competing business.
  • Helping set up a rival business.
  • Holding shares (stocks) of a competing business.

Do you have to sign the non-compete agreement?

If an employee chooses not to sign it, the company might end the contract. While they don’t have to sign, it’s crucial to think about the consequences, like possibly losing the job.

Is there any risk with the non-compete agreement?

Always read any agreement closely and make sure you understand it. If something seems off or unclear, it’s a good idea to discuss it and maybe even negotiate with the employer. The main thing is, the company shouldn’t use this agreement to treat the employee unfairly.

Legal basis: Art. 101 paragraph 1 of Legal Code

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