DENMARK Law and Practice Contributed by: Lise Lauridsen and Sandro Ratkovic, Bech-Bruun
Termination The employer may terminate a non-competition clause agreement at any time with one month’s notice to the end of a month. If the employee has been employed for more than three months and resigns within six months after the employer has terminated the non- competition clause, the employee is entitled to a lump-sum payment equal to two months’ compensa - tion. The employee is not entitled to the lump sum if they continue in their position. This provision means that the employee may be enti - tled to the lump-sum compensation after just three months of employment, even if the six-month senior - ity requirement has not been met and the clause is therefore not valid. Refer to 2.2 Non-Solicits for a description of the so- called combined restrictive clause and the conditions Non-solicitation of employees clauses are not valid in Denmark unless agreed upon in connection with a business transfer, in which case they are subject to duration limits. A non-solicitation of customers clause – also com - prised by the rules in the Danish Act on Restrictive Covenants – aims to prevent the employee from taking employment with or performing work for the former employer’s customers, agents, suppliers, or other business partners after the termination of the employ - ment relationship. A customer clause is therefore only directed at the employee’s co-operation with specif - ic business partners and, unlike a non-competition clause, does not generally aim to prevent the employ - ee from engaging in competing business activities. Non-Solicitation of Customers Clauses The following conditions must be met in order for a non-solicitation of customers clause to be valid. • The clause can only concern customers with whom the employee has had direct business contact within the last 12 months prior to the notice or termination date. Therefore, the clause cannot be that must be met. 2.2 Non-Solicits Introduction
• The employee must be informed of the circum - stances of the employment that make it necessary to enter into a non-competition clause. • The non-competition clause may validly be agreed upon before the commencement of the employ - ment relationship, but it can only be enforced after six months of employment. • An employee cannot be bound by the non-com - petition clause for more than 12 months after the termination of employment. • If the non-competition clause is valid for up to six months, the employee must receive compensation equal to at least 40% of their monthly salary at the time of termination. For agreements with a non- competition clause lasting up to 12 months, the compensation must amount to at least 60% of the monthly salary at the time of termination. The full compensation for the first two months after termi - nation (corresponding to either 40% or 60%, as mentioned above) is a lump-sum payment to which the employee is entitled, regardless of whether the employee obtains other suitable employment within the first two months. • It is also a condition that the information about all of the above conditions is provided to the employ - ee in writing. If the employer terminates the employment relation - ship without reasonable cause, or if the employee resigns due to the employer’s breach of the employ - ment contract, the non-competition clause is invalid. Set-Off When it Comes to Compensation If an employee who is entitled to receive a compen - sation of 40% finds other suitable employment, the compensation may be offset against the new salary from the 3rd to the 6th month after termination, but the compensation can never amount to less than 16% of the monthly salary at the time of termination. For agreements involving non-competition clauses with a duration of up to 12 months, the compensa - tion must – as mentioned above – amount to at least 60% of the monthly salary at the time of termination. In cases of offset due to other suitable employment, the compensation must amount to at least 24% of the monthly salary at the time of termination.
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