Non-solicitation and non-hire agreements (“no-poach” agreements) between companies can pose antitrust risks and may result in substantial fines, among other consequences. This applies regardless of whether the companies are competitors in terms of services or products.
In non-solicitation agreements, companies agree not to actively approach each other’s employees with job offers. Non-hire agreements go even further: one party commits not to hire employees of the other party—even if they apply on their own initiative.
Such agreements are increasingly coming under the scrutiny of competition authorities because they restrict competition in the labor markets. In most cases, they are considered restrictions of competition by object. Among other things, the European Court of Justice (ECJ) recently dealt with a question referred regarding “no-poach” agreements between professional football clubs during the COVID-19 pandemic.
Under competition law, such agreements are permissible only in a few exceptional cases and within very narrow limits. Relevant factors include: In what context do they take place? Is the primary purpose (e.g., a corporate acquisition, joint venture, or supply relationship) neutral under competition law? Is the agreement an objectively necessary ancillary restraint? Is the principle of necessity also met in terms of personnel, duration, subject matter, and geographical scope? Are there less restrictive alternatives?
Therefore, no agreements should be made with other companies regarding the mutual waiver of poaching or hiring employees without careful review.
