Non-compete clauses: different rules in Slovakia and Czechia

Businesses working with suppliers, commercial agents or IT specialists in Slovakia and Czechia often use one contract template for both countries. That may prove unwise for post-termination non-competes: Slovak and Czech law may assess the same clause under different rules. Before using it, the governing law and the nature of the relationship should therefore be examined.

Slovakia: the type of contract and proportionality of the restriction are decisive

The Slovak Commercial Code, Act No. 513/1991 Zb., has an express rule only for commercial agency.

Unofficial English translation:

The contract may provide in writing that, for no longer than two years after termination, the commercial agent must not, within a specified territory or in relation to a specified group of customers in that territory, carry on for its own or another’s account the activity covered by the agency or another activity competitive with the principal’s business.

— § 672a(1) of the Commercial Code

These criteria apply directly to commercial agency. For a contract for work or another commercial relationship, the nature of the relationship, the interest being protected and the proportionality of the restriction must be assessed separately; neither the two-year ceiling nor compensation can simply be declared a universal validity requirement for every commercial non-compete.

In the dispute that later reached the Slovak Supreme Court as case 4Obdo/17/2016, the lower courts found a specific three-year restriction without a territorial limitation or compensation invalid and also refused to award the related contractual penalty. The Supreme Court, however, refused the appeal on points of law and expressly did not examine whether that assessment was correct on the merits. The case is therefore an example of the risks posed by that particular clause, not a Supreme Court ruling on the merits applicable to all commercial relationships. See our guides to commercial agents’ non-competes and non-competes agreed with self-employed contractors.

Czechia: compensation is not a validity condition

The Czech Civil Code, Act No. 89/2012 Sb., regulates non-competes generally in § 2975. The restricted activity and scope must be specified, but either a territory or a group of persons is sufficient; both are unnecessary. The maximum is five years, with a different consequence from Slovakia: a longer or indefinite term does not defeat the clause, but is reduced to five years. Above all, Czech law does not require financial consideration or penalise its absence, as the Czech Supreme Court expressly stated in case 27 Cdo 3424/2019.

The restricted party’s defence therefore focuses on proportionality between scope and necessary protection. A court may narrow, cancel or invalidate a clause that goes further than required, but only on the affected party’s application, not of its own motion. In practice, a blanket ban on any activity may fail while a restriction targeting the beneficiary’s clients and business partners survives. Commercial agency is governed by the special § 2518 of Act No. 89/2012 Sb., with a two-year ceiling similar to Slovakia.

Shared risk: reclassification as dependent work

If the collaborator works under the customer’s instructions, in its name and at times it determines, both countries may classify the relationship as dependent work. Employment law then governs the clause. Slovak Labour Code § 83a requires agreement in the employment contract itself, a maximum one-year term and compensation of at least 50% of average monthly earnings for each restricted month. Czech Labour Code § 310 has the same one-year ceiling and compensation of at least half the average monthly earnings. Czech employment law also prohibits contractual penalties outside non-compete clauses. See validity of non-compete clauses for post-employment assessment.

Implications for contracts

• One template does not work for both countries. Draft under the contract’s governing law and consider where the restricted party will actually operate.
• In Slovakia, distinguish between types of relationship. For commercial agency, comply with § 672a, including its two-year ceiling. For other commercial contracts, assess the scope and justification of the restriction and the balance of the provision; a disproportionate clause also jeopardises the contractual penalty.
• In Czechia, focus on narrow scope. Compensation is optional, but a court may reduce or cancel excessive scope on the other party’s application. Define the activity and either territory or persons.
• Assess the relationship itself, not just the wording. A clause cannot rescue cooperation that is actually employment, where strict employment limits apply in both countries.

Structuring the clause properly

We prepare clauses for both jurisdictions through bespoke commercial contracts and bilingual contracts, assess existing provisions through contract reviews and structure self-employed contractor relationships so client protection does not depend on an invalid clause. Send the clause for assessment before signing, or before trying to enforce it.