No-Poach Agreements

No-poach agreements are agreements in which companies undertake not to solicit or hire each other’s employees. In practice they often take the form of an oral “gentlemen’s agreement” between managers rather than a written contract. Through such agreements companies stop competing for labour, and employees lose the opportunity to find better terms.

The Competition Board’s Approach

The Competition Board treats no-poach agreements as clear and serious infringements, i.e. cartels; its decision of 11.11.2021 No. 21-55/765-381 is a key example. The Board published its Guidelines on Competition Infringements in Labour Markets in 2024, and the number of investigations in this area has risen markedly in recent years.

According to the Board, companies need not compete in a product market for an infringement to arise. Companies competing to hire employees with the same skills, such as a bank and a software company both employing software engineers, are competitors in the labour market.

Clauses That May Be Ancillary Restraints

No-hire clauses tied to a service, consultancy, outsourcing or acquisition transaction may be acceptable to the extent necessary and proportionate to the main transaction. The clause should:

• Be limited to employees actually involved in the transaction,
• Be limited to the duration of the transaction and a reasonable additional period,
• Serve to protect the main transaction.

General, reciprocal and indefinite prohibitions may be investigated.

Difference from an Employee Non-Compete

An employee non-compete agreed between an employer and its own employee is governed by the Code of Obligations; a no-poach agreement between rival employers is governed by competition law. For a similar infringement, see Wage-Fixing Agreements. Because these agreements are clear and serious infringements, commitments are not available in investigations. For details, see Competition Law and Labor Markets.