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About no-hire agreements and statements of employment particulars

October 2011 - Employment. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

More articles by this firm.

Statements of employment particulars
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.
The above does not constitute legal advice and should not be relied upon as such
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