Company could enforce no-hire clause

A quality consultant worked for a consulting company. As part of his work, he was assigned to a project with a client. During the project, the client wanted to hire the employee directly.

However, the agreement between the company and the client included a no-hire clause – that prevented the client from hiring the employee during the project and for one year after.

The District Court concluded that the no-hire clause was valid. It noted that the restriction on applying such clauses for temporary staffing agencies did not apply to the company. It found that the consulting company did not qualify as a temporary staffing agency as:

• Most of the work was controlled by the company, not the clients
• Social activities were arranged by the company for its employees
• Hiring ads issued by the company did not match a temporary staffing agency’s
• Employees worked with multiple clients

In addition, the Court found that the employees’ employment conditions, salary packages, and education levels were like those of regular employees, not temporary agency workers.

IUNO’s opinion

Besides confirming the main rule – that no-hire clauses are allowed except for temporary staffing agencies – the case shows that companies may involuntarily qualify as such. The detailed assessment shows that it is a case-by-case assessment, but that consulting companies are especially vulnerable.

IUNO recommends that companies understand the limitations when job clauses are applied as part of agreements with clients, or employees, for that matter. In addition to the restrictions under the relevant employment rules, restrictions also apply under the competition rules. The fact that both Denmark and Norway have banned the use of job clauses except for very specific situations confirms how the clauses can affect the market.

[Malmö District Court Case T 4977-24 of 14 February 2025]