Employment clauses: non-compete and non-solicit

Employment clauses are one of the most debated topics in Danish employment law. The rules are set out in the Employment Clauses Act (ansættelsesklausulloven), which applies to clauses entered into from 1 January 2016, and non-compliance can be costly, either because the clause is declared invalid, or through a damages claim from the employee.

This guide gives you as an employer an up-to-date overview of the requirements for non-compete and non-solicitation clauses, what to watch out for, and what happens if the clause does not hold.

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The two types of employment clauses

Danish employment law operates with two central clause types, both governed by the Employment Clauses Act (ansættelsesklausulloven):

Non-compete clause

A non-compete clause limits the employee's ability to:

• Work for a competing business (as an employee)
• Start a competing business (as self-employed or via a company)

The purpose is to protect the company's trade secrets, know-how and investments in employee development.

Non-solicitation clause

A non-solicitation (customer) clause limits the employee's ability to:

• Contact the employer's customers after leaving
• Serve those customers for a period

The purpose is to protect existing customer relationships that the employee has built up through the employer.

Combination options

It is possible to combine a non-compete clause and a non-solicitation clause, but such a combined clause may have a duration of at most 6 months (against 12 months for a standalone clause).

Note that combined clauses place higher demands on documentation and compensation.

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The conditions for valid clauses

Both clause types require a number of conditions to be met. If you are missing one, the clause is invalid.

1. The employee requirement: a specially trusted position

Only employees in a specially trusted position ("helt særlig betroet stilling") can be subject to clauses. This requires that the employee has access to:

• Confidential business information of strategic importance (prices, strategy, product development)
• Central customer relationships that are decisive for the company

Who is typically in a specially trusted position?

• Directors and senior managers
• Sales managers with access to the entire customer database
• Developers with knowledge of proprietary technology and patents
• Advisers with confidential access to key customers

Who is typically NOT in a specially trusted position?

• Standard salespeople with a defined customer segment
• Administrative staff
• Employees in production and logistics
• New hires without access to strategic information

The assessment is concrete and individual, it is not enough that the position is called "manager" or "senior". The content of the role decides it.

2. The writing requirement

The clause must be agreed in writing as part of the employment contract or in a separate addendum. Oral agreements or subsequent changes that are not confirmed in writing have no legal effect.

3. The compensation requirement

Compensation must be paid to the employee during the clause period:

Duration of the clause	Minimum compensation
Up to 6 months	At least 40% of the salary at the time of leaving
6-12 months	At least 60% of the salary at the time of leaving

About the compensation:

• The first 2 months are paid as a lump sum on leaving, regardless of whether the employee finds a new job
• Thereafter it is paid monthly for the rest of the clause period
• If the employee finds other suitable work, the ongoing compensation from month 3 can be reduced to at least 16% (clauses up to 6 months) or 24% (up to 12 months). The employee has a duty to seek other suitable work (duty to mitigate loss)
• The compensation is taxable for the employee. For a combined clause the rate is 60%

Example: A sales director with a monthly salary of DKK 70,000 is dismissed and is subject to a 12-month non-compete clause. The starting point is DKK 42,000 per month (60%). The first 2 months are a lump sum, and if the sales director finds other suitable work, the ongoing rate from month 3 can fall to 24% (DKK 16,800).

4. Maximum duration

A standalone non-compete or non-solicitation clause can last at most 12 months from the leaving date, and a combined clause at most 6 months. Agreements for a longer duration are invalid as to the excess.

5. Geographical scope

The clause should have a precise geographical scope that matches the company's actual market area. A clause that prohibits a local salesperson from working "anywhere in the world" is overbroad and can be set aside.

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When does the clause lapse automatically?

There are situations where an otherwise valid clause lapses automatically:

The employer dismisses without fair grounds

If the employer dismisses the employee, and cannot show fair grounds in the employee's own circumstances, the non-compete clause lapses. It is a decisive protection for employees.

This does not apply, however, if the dismissal is due to the company's circumstances (for example redundancies), in that situation the clause still applies, and compensation must be paid.

The employee is summarily dismissed with cause

If the employer summarily dismisses with cause (for example for material breach, theft or disloyalty), the clause does not lapse, but compensation can be set off against a damages claim against the employee.

Termination during the probation period

Clauses typically do not apply to leaving during the probation period, unless this is expressly agreed.

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Enforcement and consequences of a breach

A valid clause can be enforced before the courts. The consequences for an employee who breaches the clause:

• An injunction (fogedforbud) against continuing the competing work
• A duty to repay compensation received
• Damages for the loss the employer has suffered

Remember that the burden of proving that the employee has breached the clause lies with the employer. Documentation is decisive.

Liquidated damages

Many clauses contain a liquidated-damages clause (konventionalbod), a pre-agreed amount to be paid on breach. This does not release the employer from proving that the clause was actually breached, but it makes the calculation of damages simpler.

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Practical advice for employers

Do it from the start

Clauses inserted into existing employment contracts require a new basis of agreement. You cannot just send an addendum without ensuring that the employee is genuinely bound. Make sure to have the clauses in place from the day of hiring.

Tailor to the specific employee

Copy-paste clauses that apply to all employees are a mistake. A clause imposed on an employee who is not in a specially trusted position is invalid and can backfire.

Assess regularly

The employee's position can change. A clause that was valid at hiring can become invalid if the employee is moved to a position without strategic access. Revise the clauses on role changes.

Document the reason for the clause

Note in the personnel file which specific knowledge or which customer relationships justify the clause. It strengthens your defence in any court case.

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How the clauses interact with confidentiality agreements

Employment clauses and confidentiality agreements (NDAs) are two separate tools:

• The NDA prohibits disclosure of confidential information, it applies as a rule always, regardless of whether there is a non-compete clause
• The non-compete clause limits who the employee may work for, not only what they may say

Many companies combine both elements in the employment contract. It is good practice, as the NDA provides protection even if the non-compete clause lapses.

See our guide to NDAs and confidentiality agreements.

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LegalDock templates for employment clauses

LegalDock offers up-to-date templates that reflect the applicable rules:

• Employment contract with non-compete clause, includes clause provisions
• See our templates

All templates are reviewed against the applicable rules and can be filled in and signed digitally.

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Related articles

• What is an employment contract?
• Non-compete clause, rules and requirements
• Non-solicitation clause in employment
• The Salaried Employees Act, rights and rules
• NDA and confidentiality agreement, a complete guide

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Frequently asked questions about employment clauses

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The content of this article is for guidance only and does not constitute legal advice. The rules on employment clauses are complex, and the specific validity depends on the individual circumstances. Contact a lawyer if you need specific guidance.