Offering better employment terms to attract an excellent employee is part of the labour market. Freedom to choose one’s occupation and place of work is guaranteed by Article 65 of the Polish Constitution. Alongside protection of private property and economic activity, it is a key element of a market economy. Under existing case law, recruiting employees may be unethical where the intention is to harm a competitor. If a specialist is recruited to bring information about competitors’ customers’ needs, price lists or know-how, or to cause even temporary staffing paralysis at a competitor, this amounts to poaching and also an act of unfair competition.
An act of unfair competition
Under the Polish Act of 16 April 1993 on Combating Unfair Competition (the ‘Unfair Competition Act’), an act of unfair competition means:
(1) inducing a person working for a business not to perform, or improperly to perform, their employment or other contractual duties in order to benefit oneself or a third party, or to harm the business;
(2) inducing a business’s customers or other persons to terminate their contract with it, or not to perform or improperly to perform that contract, in order to benefit oneself or a third party, or to harm the business;
Inducement means urging, persuading or influencing a person’s decision-making. Encouraging someone to change jobs goes beyond merely making a competing offer where it is intended to weaken a competitor’s market position. If we suspect that a competitor has committed an act of unfair competition, successfully pursuing liability requires showing that: (1) the conduct is connected with business activity; (2) it is contrary to law or accepted standards of fair dealing; and (3) it infringes or threatens another business’s interests.
An act of unfair competition carries civil sanctions. In such cases, the injured party may seek: (1) cessation of the unlawful conduct; (2) removal of its effects; (3) publication of one or more statements of appropriate content and form; (4) compensation for loss under the general rules; (5) surrender of unjustly obtained benefits under the general rules; and (6) an award of an appropriate sum for a specified public-interest purpose connected with supporting Polish culture or protecting national heritage, if the act involved fault. Claims arising from acts of unfair competition become time-barred after three years. The limitation period begins when the injured party learns of the infringing act and the perpetrator’s identity (Article 20 of the Unfair Competition Act).
How can you protect your business from employee poaching?
Employers can include contractual provisions protecting trade secrets, impose non-compete obligations or require a retention agreement connected with expenditure on planned professional training.
Trade secrets are currently defined in Article 11(2) of the Unfair Competition Act. Relevant factors are the information’s commercial value, the fact that it is neither generally known nor readily accessible to people who normally deal with that type of information, and the measures taken with due care to preserve confidentiality. Merely marking a document ‘confidential’ does not replace these requirements. An NDA should define the information covered, permitted use, exceptions and the parties’ duties. Liability mechanisms must suit the legal relationship, particularly where an employee is a party.
An employee non-compete agreement must be in writing. A restriction during employment must be distinguished from one after employment ends. The latter concerns employees with access to particularly important information whose disclosure could harm the employer, and requires a defined period and compensation. The minimum compensation is 25% of the remuneration received before employment ended, calculated over a period corresponding to the duration of the restriction. This arrangement should not automatically be transposed to B2B relationships, nor should identical contractual penalties be used for every type of breach.
An established practice among employers is to enter into training agreements. Under a training agreement, an employer investing in an employee’s development may require repayment of benefits provided for professional development in specified circumstances, such as resignation. Under Article 103[5] § 2 of the Polish Labour Code, an employer may require an employee to remain with the business for up to three years after completing their studies. The period should be specified in the agreement. Failure to do so may render the agreement invalid.
Even if suitable clauses have not been included in contracts, certain indirect duties arise under labour law. Legal commentary and case law cite Article 100 § 2(4) of the Polish Labour Code as the basis of a general non-compete obligation. Competing with one’s own employer is sometimes regarded as a breach of the employee’s duty to safeguard the workplace’s interests. For management and key employees, that duty may require refraining from competing activities or working for a business that carries them on.
No-poaching agreements in Poland
Between 2011 and 2015, proceedings in a Californian court were brought against Google, Apple, Intel and Adobe by 64,000 employees alleging no-poaching collusion and unlawful wage suppression. Between 2005 and 2009, Steve Jobs, Eric Schmidt and Sergey Brin repeatedly contacted one another about refraining from recruiting each other’s employees and setting joint pay limits. The affair ended with compensation totalling USD 415 million, approximately USD 6,400 per person. It received widespread media coverage.
In Poland, agreements between businesses not to hire one another’s employees raise legal concerns. According to the Szczecin Court of Appeal’s judgment of 23 April 2015 (case I ACa 134/15), such provisions conflict with individuals’ right to choose their place and type of employment and are void as contrary to the principles of social coexistence (Article 353[1] of the Civil Code and Article 10 of the Labour Code). Freedom to choose work also includes the right to end an employment relationship, which, as a rule, cannot be restricted by the employer. In that case, the claimant company sought PLN 100,000 in contractual penalties from another company because an entity connected with the defendant had recruited its employee. The claimant and defendant had agreements for HR and accounting services, containing a mutual no-hire clause. The court held that the constitutional freedom to choose work encompasses the right to end employment, to choose an employer and to choose and pursue an occupation. Employers cannot restrict these rights in any way. Freedom of contract is subject to limits arising from the need to preserve both the required content of the obligation and the contract’s purpose. Neither the content nor the purpose may conflict with the nature of the obligation, the law or the principles of social coexistence (principles of equity). Limiting contractual freedom on that basis is intended to protect universal values; the Code itself requires a contract’s content and purpose to comply with accepted standards of fair dealing.
Earlier statements approving certain agreements between businesses not to hire staff should not be treated as a general endorsement of their legality. No-poaching agreements and wage-fixing may infringe competition law. The Polish Office of Competition and Consumer Protection (UOKiK) expressly warns against these practices. A restriction between employer and employee is a different arrangement from an agreement between two businesses limiting employee mobility. Every recruitment restriction, including a fee with a similar effect, requires an assessment of its purpose, scope, necessity and competition law risks.
The case law in these matters has not yet been reviewed by the Supreme Court, so there is no settled line of authority. Such agreements must always be assessed in the circumstances of the particular case.
