According to the proposed regulations on amendments to the Labor Code (hereinafter: LC), an employer will not be able to prohibit an employee from working for other employers as well – but with certain exceptions.
How is it currently?
Article 10 § 1 of the LC currently states that: everyone has the right to freely chosen work. No one, except in cases specified by law, may be forbidden to perform a job. This provision, however, does not explicitly state the impossibility of an employer to prohibit an employee from performing work for others.
However, the LC provides one exemption, according to which the employer may, by means of a separate agreement, enter into a non-compete agreement with the employee. More specifically, Article 101 § 1 of the LC states that: to the extent specified in a separate agreement, an employee shall not engage in any activity that competes with the employer, nor shall he provide work under an employment contract or on any other basis to an entity engaged in such activity (non-compete).
It is worth noting that the above provisions apply only to activities undertaken by the employee that are in competition with the employer. In other words, there is no provision in the LC stating that it is not possible to carry out an activity or perform work if it involves a different industry than that of the current employer. For example – working as an expeditor in a grocery store is not a competitive activity to the provision of hairdressing services.
In connection with the alignment of national law with EU law, according to the draft, Article 26 will be added to provide:
§ 1 An employer may not prohibit an employee from simultaneously remaining in an employment relationship with another employer or from simultaneously remaining in a legal relationship that is the basis for the provision of work other than an employment relationship.
§ 2 The provision of § 1 shall not apply:
- in the case specified in Article 101 § 1;
- if separate regulations provide otherwise.
The above provision will thus clarify the earlier Article 10 of the LC by saying explicitly that, with the exception of a separately executed non-competition agreement (entered into in justified cases, e.g., protection of trade secrets, avoidance of conflicts of interest), an employee may perform his work for any employer – provided, of course, that the work does not affect the quality of the employee’s work and does not interfere with each other’s schedules.
What’s more – according to the proposed regulations, an employer will not have the right to treat unfavorably an employee who performs work for several employers, terminate an employment contract or terminate it without notice due to simultaneous employment with another employer or simultaneous employment in a legal relationship that is the basis for the provision of work other than an employment relationship (Article 294 § 1). If the employer violates this provision, the employee will be entitled to compensation from the employer. It is easy to predict that this provision will be the subject of disputes in the future. This is because, on the one hand, an employee working multiple jobs will inevitably get less rest, which will affect his work efficiency, and, on the other hand, it will also be problematic to establish the causal relationship of the reason for the termination of the employment relationship so defined.
Current case law
The lack of a precise regulation of competitive activity in the LC has more than once already been the subject of a dispute between an employee and an employer. In the absence of an agreement on competitive activities and the simultaneous performance of such activities, there have nevertheless been judgments stating that this is a violation of the duty of care for the welfare of the workplace (as defined in Article 100 § 2(4) of the LC) and could be a legitimate reason for termination of the employment contract, or even a reason for its immediate termination, for example, the judgments of the Supreme Court:
- II PK 41/09 dated August 20, 2009,
- I PK 263/04 dated March 3, 2005,
- II PK 388/06 of June 18, 2007.
Nevertheless, this is not the case in all cases – in order for a competitive activity (not subject to the provisions of a separate non-competition agreement) to have negative consequences for the employee, the employer would have to prove the circumstances justifying the employee’s liability and the amount of the resulting damage. Then, in accordance with Articles 114-122 of the LC – the provisions on material liability – the responsibility for the resulting damage would lie with the employee.
These judgments alone show the potential for disputes that may take place under the proposed legislation.
Impact of the changes
The planned introduction of changes regarding non-competition will therefore have considerable significance from both the employee’s and the employer’s perspective. Thanks to the newly added provisions, there will finally be a clear legal basis on which an employee experiencing negative, unjustified consequences from the employer could invoke in the event of a conflict with the employer.
However, a questionable issue arises if the employer has not previously concluded a non-competition agreement with the employee and, after the implementation of the new regulations, would like to conclude one. In the absence of the employee’s willingness to sign such an agreement, the employer under the new regulations will not have grounds to dismiss the employee for this reason, as is possible until now.
It should be borne in mind, however, that in the case of a previously signed non-competition agreement, the employee knowingly agreed to it, so the amendment of the LC will not affect him in this regard and he will still be obliged to honor his agreement.
In a situation where a contract with a new employee will already be concluded after the amendment of the LC – in the case of a mutual will to also conclude a non-competition agreement, the Employer will be required to conclude it in a form separate from other agreements before the start of cooperation. In it, the parties should specify what activities are included in the competitive activity and specify the consequences in the event of the Employee’s failure to comply with the agreement. The Employee will then be obliged to honor such an agreement, but any other activity beyond it will not be able to cause the Employee to suffer negative consequences. In other words – only the competitive activities included in the non-competition agreement, which will be performed by the Employee despite signing it, will be able to constitute grounds for dismissal of the Employee in question or termination of the agreement without notice.
The planned amendments concern the implementation of Article 9(1) of Directive 2019/1152 of the Directive into Polish law and can be found here. Currently, the draft law has been referred to the Committee on European Affairs for consideration.