AD 2026 No. 23 – The 2015 agreement on non-competition clauses does not cover non-solicitation clauses

The 2015 agreement on the use of non-competition clauses in employment contracts between the Confederation of Swedish Enterprise (Svenskt Näringsliv) and the Council for Negotiation and Cooperation (PTK) does not cover non-solicitation clauses. This applies regardless of how extensive or restrictive of competition the clauses may be considered to be, and regardless of their ultimate purpose, and despite the fact that the poaching of customers for a competing business, in a sense, constitutes engaging in such business. Since the agreement does not apply to non-solicitation clauses, its other provisions – in this case, the arbitration clause – are also not applicable in the event of a dispute concerning a contractual penalty for breach of such a clause.

Background:

An employment contract contained a non-solicitation clause which, amongst other things, meant that the employee was prohibited, for a period of six months following the termination of employment, from directly or indirectly soliciting the company’s customers, or from inducing or attempting to induce any customer to leave the company in favour of a competing business. The prohibition was subject to a penalty clause. After the employee had left the company, the company brought proceedings before a civil court and sought an order for the agreed penalty to be imposed. The company argued that the employee had breached the non-solicitation clause by attempting to solicit several of the company’s customers to a competing business.

The employee objected that the claim should be dismissed on the grounds that the non-solicitation clause constituted a non-competition clause under “the 2015 Agreement on the Use of Non-Competition Clauses in Employment Contracts and Agreements on arbitration rules for the Arbitration Board in disputes concerning inventors’ and non-competition clauses”, concluded between the Confederation of Swedish Enterprise (Svenskt Näringsliv) and the Council for Negotiation and Cooperation (PTK). The agreement includes, amongst other things, an arbitration clause. In support of his view, the employee argued, amongst other things, that the 2015 agreement states that it applies to “such non-competition clauses […] which entail a prohibition on taking up employment in, or otherwise conducting or engaging in, competing business activities.”

The company objected to the dismissal of the case and argued that the non-solicitation clause is not a non-competition clause covered by the 2015 agreement.

The Labour Court’s assessment:

The Labour Court found that it follows from the 2015 agreement, read in the light of the accompanying joint commentary by the parties, that clauses preventing an employee from soliciting the former employer’s customers are not, in themselves, covered by the agreement. This applies regardless of how extensive or restrictive of competition the clause is, and irrespective of the actual purpose of the clause. According to the court, this applies even though soliciting customers for a competing business, in a sense, constitutes ‘engaging in’ a competing business.

Setterwalls’ comment:

This case provides welcome guidance on a question of demarcation that can be difficult to assess in practice. In certain sectors and types of business, a non-solicitation clause may in practice restrict an employee’s ability to work for a competitor, and the question arises from time to time as to whether such a clause can be regarded as a non-competition clause and thus fall within the scope of the 2015 agreement. In this case, the Labour Court clearly establishes that non-solicitation clauses are not covered by the agreement. The scope for claiming in future that a non-solicitation clause is covered by the rules of the 2015 agreement must therefore be regarded as very limited.

However, the ruling does not address, for example, whether the reasonableness of a non-solicitation clause should be assessed in accordance with the principles set out in the 2015 agreement or, for that matter, whether what has been designated in an agreement as a non-solicitation clause in practice constitutes, or should be assessed as, a non-competition clause (see, for example, AD 2002 No. 115 and AD 2017 No. 38).