CLV Partners


Reinterpreted Restrictive Covenant!

The supreme court has confirmed that it is not possible to incorporate the consideration for non-compete into the monthly wages even in the labour contract with the executive employees. The common practice is that the employees are required to notify the employer on the data of their a new employer.

Now according to the decision of the supreme court, breach of the notification undertaking shall not be penalised, only breach of the restrictive covenant. This surprising decision would significantly reduce the employers ability to check the fulfilment of this undertaking, because they do not become aware or only by accident if their former employee works for their competitor if there is no sanction for non-reporting. The labour code but it is a contract governed by the Civil Code which basically based on the principle of the parties’ freedom to freely determine their agreement in the absence of expressly prohibited provision, and the Civil Code does not prohibit the imposition of a penalty for breaching of notification obligation. It seems that the courts leave less room for the Hungarian employers in their civil law