Under Finnish law, the inclusion of a non-competition obligation that remains effective after the termination of an employment contract may be possible for a specific reason; a non-competition obligation that is established without just cause is unenforceable.
Based on several decisions of the Supreme Court, the requirement that a non-competition obligation may not be established without a proper reason shall apply to all provisions that effectively restrict the employee's possibility of working within their respective industry. Accordingly, other obligations, such as a wide-reaching, non-solicitation obligation, may also be treated as a non-competition obligation if they limit future employment options in the same way as a non-competition obligation.
In terms of confidentiality obligations, the Employment Contracts Act stipulates that an employee may not reveal or use confidential information during their employment. However, the legislation does not include any explicit provisions concerning the possibility of extending the confidentiality obligation to the period after the employment's termination.
The Court of Appeal recently ruled that a non-competition obligation and a confidentiality obligation that were included in an employment agreement should be evaluated as a single entity. The Court emphasised that, since both obligations were listed under the same heading and concerned the period after the termination of the employment contract in question, both obligations had to be considered as part of the non-competition obligation. Therefore, each obligation would be enforceable only if there were a justifiable reason for the inclusion of a non-competition obligation in the employment agreement.
The Court ruled that the company had not been able to demonstrate that there was a justifiable reason to include a non-competition obligation in the employment agreement. Therefore, neither the non-competition obligation nor the confidentiality obligation was enforceable.
It is expected that the ruling will be appealed to the Supreme Court. However, even if the decision is ultimately reversed, it is an important reminder that any post-contractual restrictions should be drafted carefully.
For further information on this topic please contact Jouni Kautto at Waselius & Wist by telephone (+358 9 668 9520) or email ([email protected]). The Waselius & Wist website can be accessed at www.ww.fi.