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Legal newsletter August 2021

On the obligation of employees not to disclose their salary

It is quite common practice for employers to oblige their employees to keep certain information obtained in the context of their employment confidential. This information often includes information about the employees' salary as well as their other remuneration. Employees are usually obliged to keep their salary confidential, for example, in the employment contract itself or by internal regulations. However, it is a frequently debated question whether this particular obligation is in accordance with the law.

According to the Labour Code, any agreed upon deviation from rights or obligations as set out by law or a collective agreement may not lower or heighten these rights or obligations compared to the standard set forth by law or a collective agreement. This, as well as other provisions of the Labour Code, shows a high emphasis on the protection of employees' rights. In fact, there is no provision in the Labour Code concerning the obligation of confidentiality of salaries. At first glance, therefore, it could be said that it is not possible to impose a valid obligation of confidentiality on employees with regard to their salaries. However, it should be borne in mind that employees are obliged to act in accordance with the legitimate interests of their employer. Employer’s legitimate interests may include not disclosing the amount of pay and the method of remuneration to the employer’s competitors.

On the other hand, care should be taken in the wording of this obligation. In the Ombudsman's view, it is not possible to set out the obligation in absolute terms, i.e. in such a way that the employee is not allowed to disclose the amount of his salary to anyone. This would disproportionately affect the rights and obligations of employees.

Furthermore, according to the Ombudsman, the provision imposing such an obligation on the employer's other employees is not permissible either, since the comparison of salary levels is one of the ways in which employees are protected against salary discrimination.

Clients who oblige employees to keep their salaries confidential may therefore be advised to pay close attention to the wording of this obligation.


On the employer's ability to withdraw from the competition clause

Until recently, the view that an employer cannot withdraw from a non-compete clause without giving a reason was universally upheld by theory and case law. Giving this option to employers was considered too disadvantageous to employees, among other because of the negative impact on employees’ legal certainty. This approach was not too surprising given the strong protection afforded to employees in their employment relationships.

Even more surprising is a recent judgment of the Constitutional Court in which it addressed the issue. This was a case where the employer and employee had negotiated a competition clause. Under this competition clause, they agreed that each of them was entitled to withdraw from the clause, even without giving a reason. The employer exercised this option after the employee gave notice of termination of employment and withdrew from the clause without giving any reason.

Not surprisingly, the employee did not agree with this procedure and turned to the courts. His aim was to have the withdrawal from the competition clause annulled. In view of the aforementioned approach, the employee succeeded at all instances, including the Supreme Court. It was only the Constitutional Court that sided with the employer and described the blanket prevention of employers from withdrawing from a competition clause without giving a reason as excessive, irrational and violating the employers’ fundamental rights, emphasizing the importance of autonomy of will and freedom of contract.

In the conclusion of the decision, the Constitutional Court stressed that each case must be assessed individually. Nevertheless, it can be assumed that this approach will be applied to similar disputes in the future.


Protection of entrepreneurs in legal relations

It is generally accepted that an entrepreneur, as a business professional, must demonstrate a greater degree of prudence and knowledge. This is particularly true when compared to the level of protection afforded to consumers by the law. However, even entrepreneurs may find themselves in situations where they make unfortunate business decisions and find legal protection.

In the view of the Supreme Court, even entrepreneurs are always protected by the corrective of good morals. This means that if an entrepreneur enters into a business contract which is contrary to good morals, it is possible to claim that the contract is void. This occurred in a recent case before the Supreme Court in which a businessman took out a loan from a non-banking institution on which the contract imposed an interest rate that exceeded the normal interest rate by more than 15 times. In this case, the Supreme Court held that such an arrangement was contrary to good morals and that this remedy also applied between entrepreneurs. It therefore declared the contract null and void on this point.

We should also mention that an entrepreneur may also be considered the so-called weaker party to a contractual relationship and as such be entitled to protection corresponding to that. In particular, the stronger contractual partner must not abuse its stronger economic position to achieve an obvious and unjustified imbalance in the mutual rights and obligations of the parties. Even in such a case, the weaker contracting party may invoke the invalidity of the legal transaction, whether or not he or she is an entrepreneur.