Summary

As of the adoption of the Estonian Employment Contracts Act the parties to an employment contract have enjoyed the right to agree on the application of prohibition of competition. However, its insufficient regulation has raised a lot of questions in practice. Although the nature and the provisions governing the prohibition have already been tackled in Juridica, the issue is revisited as a new draft Employment Contracts Act has been tabled before the Riigikogu. The draft Act makes a substantial contribution to supplementing the regulation. In addition, the draft Act attempts to provide for the employee’s loyalty obligation, a new concept in the Estonian legal system, which is also related to prohibition of competition.
The author analyses the nature of prohibition of competition applicable to an employee from the perspective of the employee’s loyalty obligation, looks at the definition of prohibition of competition, the condition for its imposition, determination of the employer’s competitors and competing activity, and issues concerning the liability of an employee. In order to give a better overview of the topic, the author also draws on the pertinent legal literature of other countries which are close to Estonia either by their geographical position or legal system, such as Finland, Sweden, Denmark, Germany, Italy and France. Examples are also brought from the case law.