A non-compete agreement (umowa o zakazie konkurencji) is an important legal tool that lets employers in Poland protect their business interests. It can cover both current employees during employment and former employees after the employment ends. A proper understanding of the rules for concluding it, its form and the related rights and obligations is key to effectively protecting the business. Paying the non-compete compensation, with tax withheld and reported on the PIT-11, can be handled as part of our HR and payroll services.
A non-compete agreement between an employer and an employee is governed by Articles 101¹-101⁴ of the Labour Code (Kodeks pracy), and in matters they do not regulate the Civil Code (Kodeks cywilny) applies accordingly (Article 300 of the Labour Code). The agreement must be in writing, otherwise it is invalid (Article 101³ of the Labour Code), and failure to keep this form makes the agreement absolutely invalid and without legal effect
These agreements are regulated in the Labour Code of 26 June 1974 (Articles 101¹-101⁴, consolidated text Dz.U. 2026 poz. 1245). In matters not regulated in the Labour Code, the provisions of the Civil Code of 23 April 1964 apply accordingly, as long as they do not conflict with the principles of labour law. A non-compete clause in an agreement with a contractor who is not an employee (e.g. in a contract of mandate (umowa zlecenia) or an agreement with a business working on a B2B basis) is not subject to these Labour Code rules - the parties agree it under freedom of contract (Article 353¹ of the Civil Code), with no statutory minimum compensation. The Labour Code provisions also do not affect non-compete obligations laid down in other acts (Article 101⁴ of the Labour Code).
Basic rules for concluding a non-compete agreement
A non-compete agreement can be concluded at two different points - both during employment and with a view to its end. Each of these situations has its own features and legal requirements that must be taken into account when drafting the document.
Written form of a non-compete agreement is strictly required by law (Article 101³ of the Labour Code). Failure to keep it makes the whole agreement invalid, which means it has no legal effect on the parties
The main purpose of such an agreement is to oblige the employee or former employee not to carry on, within a defined scope, activity competing with the employer. This also covers working under an employment relationship or on any other basis for an entity carrying on activity competing with the employer (Article 101¹ § 1 of the Labour Code).
An important rule is that the Labour Code does not provide an employee in a current employment relationship with additional pay or compensation for complying with the non-compete clause - but the parties may agree on it in the agreement. This is one expression of the employee's loyalty to the employer, arising from the very fact of employment.
- Define the precise scope of the non-compete clause
- Set the duration of the agreement and its validity
- Specify the amount of compensation for former employees
- Draw up the agreement in writing
- Have the document signed by both parties
Non-compete during employment
During current employment, a non-compete agreement aims to ensure the employee's full loyalty to the employer. During this period, within the scope defined in the agreement, the employee may not take actions that could expose the employer to damage or compete with its business.
Such agreements are used in practice across various industries and professions. They are used, for example, for drivers carrying passengers, where in addition to protecting the carrier's interests they make it easier to ensure that drivers do not exceed the daily working time and are not overtired.
A non-compete agreement during employment does not entitle the employee to additional pay unless the parties agree on it. The Labour Code does not require additional financial compensation during this period - the clause is linked to the duty to look after the employer's interests
In practice the non-compete clause is often written directly into the employment contract (umowa o pracę), although the Labour Code refers to a "separate agreement" (Article 101¹ § 1). If the parties choose this solution, it is worth clearly separating the non-compete provision, defining its scope and keeping the written form. Special protection for certain groups of employees, such as pre-retirement protection, applies regardless of such clauses.
A transport company employing city bus drivers concluded non-compete agreements with them to ensure that they would not work for competing carriers at the same time. This protected its interests and also made it easier to monitor its drivers' total working time and reduce the risk of fatigue.
Non-compete after employment ends
The situation is much more complex for non-compete agreements with former employees. Such agreements must be concluded while the employment relationship still lasts, for example during the notice period, and may only cover employees who have access to particularly important information.
Post-employment non-compete agreements may only cover employees who have access to particularly important information whose disclosure could expose the employer to damage. The duration of such a clause is agreed jointly, taking into account the circumstances of the specific situation
The Labour Code does not specify the exact duration of a post-employment non-compete, leaving it to the parties - but the period of the clause must be set out in the agreement (Article 101² § 1 of the Labour Code). The period should be proportionate to the circumstances, the type of information held by the employee, the specifics of the market and the value of the employer's business.
Employees who may be subject to such a clause include programmers and IT specialists working on specific niche projects. The same applies to chefs who have gained specialist knowledge and skills that would allow them to open their own restaurants offering similar dishes.
- Programmers working on unique technology projects
- Chefs who know proprietary recipes and cooking techniques
- Marketing specialists who hold promotional strategies
- Sales staff who know the customer databases
- Designers with access to proprietary solutions
Any business with a unique character can be a basis for concluding a non-compete agreement with an employee whose employment is about to end. The key point, however, is that the employee actually has information that could harm the employer if disclosed.
Compensation for complying with the non-compete clause
The key difference between a non-compete clause for current and former employees is the obligation to pay compensation to the latter. This compensation makes up for the restrictions on taking up gainful activity after employment ends.
Compensation for a former employee's compliance with the non-compete clause may not be lower than 25 percent of the salary received by the employee before the employment ended for a period corresponding to the duration of the non-compete clause
The minimum amount of compensation is set by Article 101² § 3 of the Labour Code. The minimum is 25 percent of the salary the employee received before the employment ended, calculated for a period corresponding to the duration of the non-compete clause. The parties may of course agree on higher compensation, but it may not be lower than the statutory minimum.
The method of paying compensation may vary depending on what the parties agree. It may be paid in monthly instalments, which is the most common solution in practice, or as a lump sum. The decision depends on the mutual agreement of both parties; the provision expressly allows payment in monthly instalments, and in a dispute over compensation the labour court decides (Article 101² § 3 of the Labour Code).
Compensation paid to a former employee after the employment has ended is not subject to ZUS (Social Insurance Institution) contributions - it is excluded from the social insurance contribution base (§ 2(1)(4) of the regulation on the detailed rules for determining the contribution base, consolidated text Dz.U. 2025 poz. 316). It is, however, subject to income tax, because the PIT (personal income tax) Act expressly excludes it from the exemption for compensation (Article 21(1)(3)(d) of the PIT Act). An additional amount paid for a non-compete clause during employment is an ordinary part of salary - subject to contributions and tax. Contributions on pay can also lead to disputes with ZUS, for example when it treats an arrangement as a sham employment contract.
An employee who has worked for 10 years at a technology company and has specialist knowledge of proprietary algorithms may sign a non-compete agreement for 3 years. Compensation will be calculated on the basis of their salary from the last 3 years of work, at a minimum of 25 percent of that amount.
| Period of employment | Non-compete period | Calculation base | Minimum compensation |
|---|---|---|---|
| 2 years | 1 year | Salary for 1 year | 25% of annual salary |
| 5 years | 2 years | Salary for 2 years | 25% of salary for 2 years |
| 10 years | 3 years | Salary for 3 years | 25% of salary for 3 years |
Flexibility of the agreement and options to modify it
A non-compete agreement may contain various provisions allowing the parties to manage its validity flexibly. A non-compete clause may include provisions allowing either party to withdraw from it or terminate it in specified circumstances.
A non-compete clause may contain provisions allowing the parties to withdraw from the agreement, terminate it or end it by mutual agreement. It may also provide for conditions precedent or subsequent, such as the liquidation of the employer
Regardless of the agreement's provisions, a post-employment non-compete ceases to apply before the end of the term for which it was concluded if the reasons justifying it cease to exist or the employer fails to pay the compensation (Article 101² § 2 of the Labour Code). The agreement may also end in other ways. It may end by mutual agreement of the parties, who may decide at any time to end the non-compete. Another option is the fulfilment of a stipulated condition, such as the liquidation of the former employer or a change in its business profile.
Practice shows that a flexible approach to drafting the agreement allows its content to be better tailored to the specifics of a particular industry and type of work. This helps keep a balance between the employer's interests and the employee's rights.
Rights and obligations of the employer
An employer concluding a non-compete agreement gains a number of rights but also takes on certain obligations. Knowing these rights and obligations is key to enforcing the agreement effectively.
The employer's most important rights include the ability to claim compensation from the employee or former employee for damage caused by breaching the non-compete clause. With a current employee this follows the rules on employees' material liability (Article 101¹ § 2 of the Labour Code) - for unintentional fault up to three months' salary (Article 119), and for intentional damage in full (Article 122). In a post-employment non-compete agreement the parties may also provide for a contractual penalty; the employer may demand payment if the conditions for imposing it are met.
In a dispute over compensation for complying with the non-compete clause, either party may apply to the labour court (Article 101² § 3 of the Labour Code). The employer may also claim compensation for damage and, in an agreement covering the period after employment, also a contractual penalty if one was stipulated
In addition, the employer may bring the matter before the labour court if disputes arise over the amount of compensation or the proper interpretation of the agreement.
The employer's obligations include, above all, proposing the agreement to the employee, drawing it up in the proper written form and making sure both parties sign it. For former employees, the employer must pay compensation on the dates and in the amount set in the agreement.
Rights and obligations of the employee
An employee who is a party to a non-compete agreement also has certain rights and obligations arising from it. The differences between the situation of current and former employees are particularly important.
The basic rights of an employee who is no longer employed include the right to receive compensation for complying with the non-compete clause. This makes up for the restrictions on taking up gainful activity after the employment ends.
- Right to receive compensation for complying with the clause
- Possibility of asking the court to determine the amount of compensation
- Right to terminate the agreement in the cases provided for
- Possibility of pursuing their rights in court
- Right to receive compensation on the agreed dates
The employee may also bring a claim before the labour court for compensation for complying with the non-compete clause, e.g. when the employer does not pay it or it was set below the statutory minimum of 25%, or when disputes over interpretation arise.
An employee bound by a non-compete clause must comply with it within the agreed scope and for the agreed period. In the event of a breach, they must compensate the employer for the damage and, if the agreement provides for it, pay a contractual penalty
The employee's obligations include, above all, complying with the non-compete clause within its scope and for the agreed period. If they breach the agreement, the employee must compensate the employer for the damage and pay a contractual penalty if the agreement provides for one and the conditions for imposing it are met.
Essential elements of a non-compete agreement
For a non-compete agreement to be valid and legally effective, it must be concluded in writing and should contain the elements required by law. The absence of some of them may lead to disputes over the validity of the agreement or make it harder to enforce.
The invalidity sanction concerns the written form (Article 101³ of the Labour Code), but the agreement must also specify the precise scope of the non-compete clause. It must be clear which activities the clause covers and in which geographical area or industry it applies. General wording may be insufficient and lead to problems of interpretation.
- Precise definition of the scope of the non-compete clause
- Clear statement of the duration of the agreement and its period of validity
- Exact amount of compensation for former employees
- Method and dates of paying the compensation
- Consequences of breaching the agreement
Another essential element is the duration of the agreement. It should be set precisely, with a clear start and end date of the non-compete clause. This is particularly important for former employees, where the period starts only after the employment ends.
A non-compete agreement must be in writing, otherwise it is invalid (Article 101³ of the Labour Code). An agreement covering the period after employment also sets out the duration of the clause and the amount of compensation (Article 101² § 1), and the scope of the clause should be described precisely
The amount of compensation should be set in a way that allows it to be calculated precisely. It may be a fixed amount or a formula based on the employee's salary. It is important that it is not lower than the statutory minimum of 25 percent of salary (Article 101² § 3 of the Labour Code). It is worth agreeing the amount at the hiring stage, when a preliminary employment contract template can come in handy.
An IT company concluding a non-compete agreement with a programmer must specify precisely that the clause covers developing software for competing technology companies for 2 years after the employment ends, with compensation of 30 percent of the last annual salary, paid in monthly instalments.
Non-compete agreement template (for illustration)
The template below concerns a post-employment non-compete and is for illustration only - before signing it must be adapted to the specific situation (scope, period and amount of compensation).
Agreement on non-competition after the end of employment
concluded on … in … between … (the employer), represented by …, and … (the employee), employed as … under an employment contract dated … .
§ 1. The employee has access to particularly important information whose disclosure could expose the employer to damage, in particular: … .
§ 2. For … months from the day the employment ends, the employee will not carry on activity competing with the employer or work under an employment relationship or on any other basis for an entity carrying on such activity. The parties regard the following as competing activity: … (type of activity, area, customers).
§ 3. For complying with the clause the employer will pay the employee compensation of …% (not less than 25%) of the salary received by the employee before the employment ended for a period corresponding to the non-compete period, in monthly instalments of PLN …, payable by the … day of each month to the employee's bank account.
§ 4. The clause ceases to apply before the end of the period in § 2 if the reasons justifying it cease to exist or the employer fails to pay the compensation (Article 101² § 2 of the Labour Code). [Optional: conditions for early termination or notice agreed by the parties.]
§ 5. [Optional] If the employee breaches the clause, they will pay the employer a contractual penalty of PLN … .
§ 6. Amendments to the agreement must be in writing, otherwise they are invalid. Matters not regulated here are governed by the Labour Code and, where it does not regulate them, by the Civil Code. Disputes are settled by the labour court.
The agreement has been drawn up in two identical copies, one for each party.
……………… (employer) ……………… (employee)
A non-compete agreement during employment is drawn up in a similar way, but without § 1 and § 3 - unless the parties agree on additional pay for complying with the clause.
