Non-compete clauses and internship agreements: what the law actually requires

When is a non-compete clause enforceable, what must an internship agreement include, and how to avoid the most common legal pitfalls.

Non-compete clauses and internship agreements

These two employment documents are among the most frequently mis-drafted — either too broad to be enforceable, or too vague to protect anyone.

Legal framework across the EU

Non-compete clauses (also called post-termination restrictions or restraints of trade) are governed by national employment law. Key differences:

• Slovakia (§ 83a Labour Code): Maximum 1 year; compensation required at minimum 50 % of average monthly salary per restricted month; must protect a legitimate interest.
• Germany (§§ 74–75f HGB): Maximum 2 years; compensation must be at least 50 % of last contractual remuneration; must be reasonable in geographic and sectoral scope.
• Czech Republic (§ 310 ZP): Maximum 1 year; compensation at least equivalent to average monthly earnings; must be agreed in writing.
• Austria (§ 36 AngG): Maximum 1 year; no statutory compensation required, but overly broad clauses are struck down by courts.

Non-compete clauses: conditions for enforceability

Courts across the EU apply a reasonableness test. A non-compete clause must be:

1. In writing — always a standalone document or clearly identified clause in the employment contract.
2. Time-limited — typically 6–12 months post-employment is considered reasonable. Longer terms are regularly struck down.
3. Geographically and sectorally proportionate — a clause banning someone from working “anywhere in Europe in any capacity” will not survive judicial review.
4. Compensated — in many EU countries (including Slovakia, Germany and the Netherlands) the employer must pay financial compensation during the restriction period, often 50 % of average monthly salary per restricted month.
5. Protecting a legitimate interest — access to trade secrets, customer relationships or proprietary methods. A non-compete for a warehouse picker is likely unenforceable.

How to draft a non-compete that holds up in court

Step 1 — Identify the protected interest. What specific know-how does this employee have? Be concrete: customer database, pricing strategy, proprietary algorithms, source code.

Step 2 — Limit scope proportionately. A senior sales executive can be restricted from contacting existing clients — but not from all employment in any technology company. Proportionality is everything.

Step 3 — Set the compensation. Calculate the minimum statutory compensation and document it clearly in the clause. Higher compensation reduces the risk of judicial invalidation.

Step 4 — Include a release mechanism. The employer should be able to release the employee from the obligation — and stop paying — if the business interest no longer exists.

Step 5 — Sign with a verifiable trail. zipzipdoc generates a non-compete clause as part of the employment contract or as a standalone document, with full OTP verification and audit trail.

Common mistakes

• No compensation provision — makes the clause void in jurisdictions that require it.
• Too broad a scope — a clause banning all employment in an industry will be trimmed or voided by a court.
• No exit mechanism — the employer should be able to release the employee (and stop paying) if protection is no longer needed.

Internship agreements

An internship can run under several legal frameworks depending on whether it is paid, tied to a school programme or purely voluntary.

| Internship type | Legal basis | Social insurance | |---|---|---| | School placement | University/school cooperation agreement | Via institution | | Voluntary (unpaid) | Voluntary work agreement | Individual | | Paid internship | Work agreement or employment contract | Mandatory |

What an internship agreement must include

1. Scope of work — what the intern does and does not do. A broad “general assistance” description can expose you to labour-law risk.
2. Duration — explicit start and end dates.
3. Remuneration (or lack thereof) — for an unpaid internship, state explicitly that no remuneration is provided.
4. Confidentiality — interns access internal systems and processes.
5. Ownership of output — anything the intern creates belongs to the company.
6. Working hours — part-time agreements typically cap hours per week; exceeding them triggers full employment obligations.

Why the paperwork matters

In the EU, an undocumented internship that looks like regular employment can be reclassified as undeclared work — exposing the company to fines, back-payment of wages and social insurance contributions. Fines can reach €100,000 in some jurisdictions.

zipzipdoc generates non-compete clauses and internship agreements tailored to your jurisdiction and role.

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Non-compete enforcement in practice: what courts actually decide

The enforceability of non-compete clauses is one of the most litigated areas of employment law. Understanding how courts actually apply the reasonableness test helps you draft provisions that will hold up — and avoid ones that courts routinely strike down.

What courts look for: the proportionality analysis

When a non-compete clause reaches a court, the judge applies a proportionality test across four dimensions:

1. Geographic scope. A clause covering “the entire EU” is proportionate only if the employee genuinely operated across the EU. For a regional sales executive covering western Slovakia, a clause covering Slovakia and the Czech Republic is proportionate; covering all of Europe is not.

2. Sectoral scope. The restriction must relate to the specific sector where the employee had access to sensitive information. Restricting a software developer from all software work is too broad. Restricting them from working for direct competitors in the same product category is proportionate.

3. Duration. Courts in Slovakia and Czechia have consistently held that 1 year is the maximum enforceable period. German courts allow up to 2 years but will reduce longer terms to 2 years rather than void the entire clause.

4. Compensation adequacy. The compensation must be paid for the full duration of the restriction — even if the employer decides partway through that the protection is no longer needed. Failure to pay while insisting on the restriction gives the employee the right to ignore it entirely.

What happens when a clause is unenforceable

In most EU jurisdictions, courts apply “blue pencil” reasoning: they trim an unenforceable clause to the maximum permissible scope rather than voiding it entirely. This means an overly broad non-compete will typically be reduced to what the court considers reasonable — which may still give the employer some protection.

The employer cannot rely on this, however. The employer bears the cost of litigation regardless of outcome, and an employee who has been competing for months may have already caused the damage the clause was designed to prevent. Drafting correctly the first time is significantly cheaper than litigating.

Internship agreement enforcement: avoiding undeclared work classification

The risk of internship mis-classification is real and the consequences are substantial. Here is exactly how to structure an internship to avoid it.

Characteristics that trigger undeclared work suspicion

Labour inspectors look for the following when assessing whether an “internship” is actually employment:

• The intern performs the same tasks as a paid employee.
• The intern works fixed hours, five days a week, over an extended period.
• The intern has no educational supervisor and is not fulfilling a school requirement.
• The company benefits economically from the intern’s work but pays nothing.

If most of these apply, the risk of reclassification is high.

How to structure a compliant unpaid internship

1. Tie it to an educational programme. The safest unpaid internship has a three-party agreement: company, intern and educational institution. The institution supervises and certifies the internship, and the educational connection removes the employment law risk.

2. Limit hours and duration. Part-time arrangements (3 days per week maximum) over a short period (8–12 weeks) are far less likely to be scrutinised than full-time year-long placements.

3. Ensure genuine learning content. The intern should rotate through departments, receive mentoring and produce a reflection or project report. If the work is purely production-level, pay the intern.

4. Document everything. Sign the internship agreement before day one. Include the educational institution’s reference. If the intern is there for learning, prove it with the written programme.

5. Pay at least expenses. Even for genuinely educational unpaid internships, reimbursing documented travel and meal costs does not trigger employment obligations and dramatically reduces resentment (and therefore complaints to labour inspectors).

Frequently asked questions

Can a non-compete clause be agreed with freelancers (self-employed)?

Yes, but the statutory requirements of the Labour Code do not directly apply to self-employed contractors. Non-compete provisions for freelancers are governed by commercial law and can have different scope and compensation structures. Courts will still assess reasonableness — overly restrictive clauses may be partially invalidated.

What is the maximum duration of a non-compete for employees?

In Slovakia, 1 year maximum post-employment. In Germany, 2 years. In the Czech Republic, 1 year. Clauses that exceed the statutory maximum are not automatically void — courts typically reduce them to the legal limit and enforce the remainder.

What happens if the employer refuses to pay the required compensation?

Without compensation the clause is legally void in jurisdictions that require it (Slovakia, Germany, Netherlands). The employee is free to join a competitor and the employer cannot enforce the restriction. The obligation to pay compensation is unconditional in these jurisdictions.

Must an internship agreement be signed before the internship starts?

Yes. The agreement must be in writing and signed before the internship begins. Retroactive agreements (signed after the start or after completion) are problematic and may be challenged by labour inspectors or social insurance authorities.

Can a non-compete restrict freelancing alongside employment?

Yes. A clause can restrict secondary gainful activity during the employment relationship (not just after termination). This type of restriction does not require compensation in most jurisdictions and applies to all employees who have signed it.

How do I sign a non-compete clause electronically?

zipzipdoc allows you to generate and electronically sign non-compete clauses as part of an employment contract or as a standalone addendum. The entire process including OTP verification takes under 5 minutes.