Non-compete agreements in lithuanian labor law

• Autores: Daiva Petrylaite, Vida Petrylaite
• Localización: Comparative labor law and policy journal, ISSN 1095-6654, Vol. 43, Nº. 1, 2023, págs. 173-204
• Idioma: inglés
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• Resumen

  • Social conditions, economic relations, and new technological processes are getting more and more complicated with every day. Noncompete agreements are becoming one of the instruments helping employers protect their business interests. The Lithuanian legal regulation and approach to such non-compete clauses has experienced an interesting development path. Mainly, such agreements (or special clauses in employment contracts) came into use much earlier than the legal regulation on the matter was adopted. Lithuanian employers, mostly taking examples from other European Union countries with more developed practice of employment relations, started to conclude non-compete agreements with employees in order to protect their legitimate business interests. In noncompete agreements, employees undertake not to engage in any activity that would compete with the employer's business. However, at the same time, such agreements have the effect of restricting the constitutional right of employees to a free choice of work and the right to engage in lawful business activity. As no direct regulation of non-compete agreements between employees and employers was yet in place at that moment, the lack of legal transparency was filled by case law developed by the Lithuanian Supreme court on this matter. Therefore, the case law was of crucial importance in interpreting non-compete agreements. The main idea of the relevant case law that was accepted and repeated in all subsequent cases was that absence of legal regulation did not mean that such type of agreements between the employer and the employee were prohibited. in order to legitimize such agreements, the case law had to formulate the relevant legal basis. Thus, the case law adopted the position that noncompete agreements must be considered as civil contracts even where the parties were the employer and the employee, meaning that these relations had to be interpreted according to civil law rather than labor law. In addition to establishing the legal grounds for non-compete agreements, the case law had to perform another task-to lay down the requirements for such type of agreements and, in particular, the criteria for assessing their legality, integrity, proportionality, and fairness. The Lithuanian courts made efforts to formulate uniform criteria and requirements, such as the validity term of non-compete agreements, compensation for non-competition, territorial scope, etc. The case law and reasoning of the Lithuanian courts were strongly criticized, mainly because of two aspects: firstly, for the idea of attributing part of employment relations not to labor but to civil law and, secondly, for creating new legal rules, that is, performing the function that is beyond the competence of courts in the Lithuanian legal system, rather that interpreting the existing legislation.