A no-hire agreement can most likely not be characterised as a term of employment. Therefore, employers are generally not required to inform employees about such agreements by including them in the statements of employment particulars. This follows from a recent Supreme Court ruling.
Under the Danish Statement of Employment Particulars Act, employers must inform employees about “all material terms of employment”. In this case, the Danish Supreme Court indirectly considered the question of whether this means that employers are also required to inform employees about any no-hire agreements they have entered into with other employers.
The issue came up because a security consultant at an IT company found out that his employer had agreed with a number of other companies not to hire each other’s employees. Those agreements, the security consultant believed, prevented him from taking employment with another company.
But his employment contract did not mention anything about him being affected by such no-hire agreements. He therefore sued his employer, claiming compensation for being issued with a deficient statement of particulars.
The IT company felt it was all a storm in a teacup. The security consultant was not affected by any no-hire agreements. The IT company also argued that employment restrictions which do not directly concern the employer-employee relationship do not constitute a term of employment within the meaning of the Danish Statement of Employment Particulars Act.
As a starting point, no duty to inform
The Supreme Court was not satisfied that the security consultant had been covered during his employment with the IT company by any of the no-hire agreements made between the IT company and other companies. That alone was sufficient to establish that the IT company was not required to inform the security consultant about the no-hire agreements.
In addition, the Supreme Court said it is “a reasonable assumption” that – at least as a starting point – the duty to inform under the Danish Statement of Employment Particulars Act does not apply to employment restrictions which do not concern the legal relationship between employer and employee, but are an indirect consequence of the employer's legal relations with third parties. At the same time, however, the Supreme Court noted that the EU Court may have another interpretation of Directive 91/533 of 14 December 1991, on which the Danish Act is based.
Norrbom Vinding notes:
- that the Supreme Court judgment implies that a no-hire agreement entered into between two employers can probably not be characterised as a term of employment within the meaning of the Danish Statement of Employment Particulars Act; and
- that, as a starting point, employers are therefore not required by the Danish Statement of Employment Particulars Act to inform employees about such no-hire agreements by mentioning them in their employment contracts; but
- that this is not a final determination of the issue since the Supreme Court seems to indicate that the issue should be referred to the EU Court.