Employment agreements in Sweden can include two key clauses to protect an employer's sensitive information and competitive edge: confidentiality and non-compete clauses. However, Swedish law balances the employer's interests with the employee's right to work freely.

Confidentiality Clauses

Confidentiality clauses are generally unrestricted in terms of duration. Employers have a legitimate interest in protecting their trade secrets, customer lists, and other confidential information. A well-drafted confidentiality clause outlines the specific information considered confidential and restricts the employee's use and disclosure of such information during and after employment.

However, these clauses can't be unreasonably burdensome. If a confidentiality clause prevents an employee from using their general skills and knowledge gained during employment, a court might deem it unenforceable.

Non-Compete Clauses

Non-compete clauses restrict an employee's ability to work for a competitor or in a similar role for a certain period after termination. Swedish law takes a stricter stance on non-compete clauses compared to confidentiality clauses.

Here's what Swedish law dictates regarding non-compete clauses:

• Reasonableness: The clause must be reasonable in scope, considering the employee's position, the employer's interests, and the potential impact on the employee's livelihood.
• Maximum Duration: The general rule restricts non-compete clauses to a maximum of nine months. Only in exceptional circumstances, with a strong employer interest, can this be extended to 18 months.
• Compensation: If a non-compete clause applies, the employer must compensate the employee for their loss of income during the restricted period.

Examples of When a Non-Compete Clause Might Be Reasonable:

• An employee with access to highly sensitive trade secrets, like a unique formula or product design.
• A senior sales representative with a deep client network the employer needs to protect.

Examples of When a Non-Compete Clause Might Be Unreasonable:

• A clause restricting a low-level employee from working any job in a broad industry sector.
• A non-compete clause with no compensation for the employee during the restricted period.

Swiss employment contracts are guided by the Swiss Code of Obligations, but they can be customized to meet specific needs. The essential elements of these contracts include:

Identification of Parties

The employer's name, address, and legal representative should be clearly stated. The employee's full name, contact information, and identification details should also be included.

Type of Contract and Term

The contract should specify whether it is fixed-term or open-ended, and its duration. Fixed-term contracts require a justified reason for renewal.

Job Description and Duties

The contract should clearly outline the employee's job title, department, and main responsibilities. It should also specify who the employee reports to within the organization.

Compensation and Benefits

The contract should state the gross salary amount, payment frequency, and any allowances. If applicable, it should outline the terms and conditions for any performance-based bonuses. It should define the regular working hours per week, adhering to Swiss legislation. The annual leave entitlement should be specified according to Swiss law or any applicable Collective Bargaining Agreements (CCTs) that provide higher minimums. The employer's responsibility for social security contributions should be confirmed.

Termination

The contract should outline the notice period required for termination by either party, following statutory minimums. It should briefly mention the possibility of termination with just cause.

Additional Considerations

If applicable, the contract should reference the relevant CCT that supplements the employment contract with industry-specific regulations. Confidentiality and non-competition clauses can be included but must comply with Swiss legal restrictions.

In Swiss employment contracts, probationary periods are a common feature. They provide both employers and employees an opportunity to assess suitability during the initial phase of employment.

Standard Duration and Flexibility

The Swiss Code of Obligations sets a one-month probationary period as the default for open-ended contracts. However, this period can be shortened or extended, up to a maximum of three months. Such modifications necessitate a written agreement between the employer and the employee.

Applicability Across Contract Types

For open-ended contracts, the one-month default period or a written agreement for variations applies. In the case of fixed-term contracts, there is no mandatory probationary period, but employers and employees can agree to include one. Apprenticeship contracts can have probation periods ranging from one to three months, with some extending to six months in specific cases.

Termination During Probation

During the probationary period, either the employer or the employee can terminate the contract with a shorter notice period, typically one month. This allows for a smoother separation if the role isn't a good fit. Importantly, no specific justification is needed for termination during probation.

An employee's absence due to illness or other valid reasons can extend the probationary period by the duration of the absence. This ensures a fair assessment period despite unforeseen circumstances. Once the probationary period ends, standard notice periods apply, which generally increase with employee seniority.

Swiss employment agreements often include confidentiality and non-compete clauses to protect the employer's legitimate interests. However, these clauses are subject to specific legal requirements to ensure a fair balance between the employer's needs and the employee's right to work.

Confidentiality Clauses

Confidentiality clauses are generally enforceable in Switzerland. They obligate employees to keep confidential any information they acquire during their employment that is not publicly known, such as trade secrets, customer lists, or business strategies. The Swiss Code of Obligations (CO) already imposes a general duty of loyalty on employees, which includes protecting confidential information. A specific confidentiality clause in the employment agreement can further clarify the scope of confidential information and the employee's obligations regarding its use and disclosure.

Non-Compete Clauses

Non-compete clauses are more restricted in Switzerland compared to confidentiality clauses. These clauses aim to prevent employees from taking up competing activities after their employment ends. Their enforceability hinges on fulfilling specific legal requirements:

• The non-compete clause must be in writing and signed by both parties.
• The employee must have full legal capacity to understand and agree to the clause at the time of signing.
• The employee's role must grant them access to the employer's clientele or trade secrets that could cause significant harm if revealed through competition.

Recent court rulings have added another layer of complexity. Non-compete clauses may be deemed inapplicable if an employee's success relies heavily on their personal skills and relationship with clients, rather than the employer's brand or specific information.

Additional Considerations

• The non-compete clause should be reasonable in scope (geographical area and activities restricted) and duration (limited time after termination). Overly broad clauses are likely to be struck down by courts.
• In some cases, Swiss courts may uphold a non-compete clause only if the employer compensates the employee for the limitations it places on their future employment opportunities.