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Employee Non-Solicitation Clauses: Competition Law Red Flag?

Last year, the European Commission warned businesses about the risks of agreeing not to ‘poach’ each other’s employees, a practice that has previously led to investigations and fines by national competition authorities. With labour market agreements now an enforcement priority for the European Commission, the CCPC may follow suit. Our Competition, Antitrust & Foreign Investment team explores the implications.


The European Commission has communicated a clear intention to take a strict approach towards all forms of ‘no-poach’ agreements. It views these agreements as a form of market sharing, which is a serious infringement of the competition laws. The Commission considers that, insofar as the competition laws are concerned, there is no meaningful distinction between an agreement not to actively or passively hire employees and an agreement not to proactively solicit employees. Both are potential restrictions of competition by object. This means that agreements not to hire or solicit another company’s employees are considered to be inherently harmful to competition. As a result, it is not necessary for the European Commission to examine their effects to find an infringement of EU competition law.

The European Commission has not yet issued an infringement decision concerning a no-poach arrangement. Last year, the European Commission announced it had opened a formal investigation in the food delivery sector, prompted by concerns about possible no-poach agreements among other matters. The announcement followed dawn raids carried out at the premises of Delivery Hero and Glovo in 2022 and 2023. Additionally, in November 2024, the European Commission announced that it had carried out dawn raids in the data centre construction industry. The purpose was to investigate “possible collusion in the form of no-poach agreements”. In Ireland, the Chair of the Competition and Consumer Protection Commission (CCPC) has confirmed that the CCPC would be keen to investigate wage-fixing or no-poach agreements if evidence of these arrangements emerged.

What does this mean for non-solicitation clauses in the context of a legitimate commercial agreement, such as a distribution agreement or a joint venture? No-poach agreements may qualify as “ancillary” to a legitimate arrangement, and therefore fall outside the competition laws. However, this arises only under strict conditions. For a no-poach agreement to qualify as an ancillary restraint, four cumulative conditions must be met:

  1. There is a main non-restrictive transaction
  2. The no-poach restriction is directly related to that transaction
  3. The no-poach restriction is objectively necessary and
  4. The no-poach restriction is proportionate to the main objective of the transaction, ie there are no less restrictive means to allow the transaction to occur.

The European Commission has set a high bar for satisfying these conditions.

For example, a non-solicitation clause will only be considered "objectively necessary" if similarly situated parties would refuse to participate in the transaction without the restriction. This is the case when the main objective of the transaction would be "impossible" to achieve without it.

Therefore, at a minimum, it is important to ensure that the clause is scoped narrowly, including by covering only those employees necessary to the relevant relationship. Additionally, the company should be satisfied that there is no alternative, less restrictive means of achieving the same result as the non-solicitation clause, eg by entering an NDA.

Given the seriousness with which competition authorities throughout Europe are approaching agreements impacting labour markets, in-house counsel should:

  • Proactively review existing commercial arrangements containing non-solicitation clauses to ensure they do not raise any competition law concerns
  • Conduct a thorough competition law analysis of any new non-solicitation agreement before it is entered into
  • Ensure HR personnel receive tailored competition law training, and
  • Obtain specialist competition law advice before anyone in the company communicates with competitors about wages or hiring decisions or strategies

Please get in touch with a member of our Competition, Antitrust & Foreign Investment team for more information.

The content of this article is provided for information purposes only and does not constitute legal or other advice.



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