Employment contracts for foreign workers face new compliance rules

IMPACT – MEDIUM

What is the change? Danish immigration authorities will now review certain contract clauses in employment contracts for foreign workers to make sure they conform to Danish regulations.

What does the change mean? The clauses that authorities will review include noncompete clauses, nonsolicitation clauses and combined noncompete/nonsolicitation clauses.

• Implementation time frame: Immediate.
• Visas/permits affected: Work permits.
• Who is affected: Companies hiring foreign workers on employment contracts containing noncompete and/or nonsolicitation clauses.
• Business impact: Employers may need to review their contracts to ensure that they comply with current regulations under the Danish Act on Employment Clauses.

Background: Danish immigration authorities have indicated that in order to obtain work authorization for foreign workers, contracts containing the specified clauses must meet the following criteria under Danish law:

Noncompete clauses.

• Can only prohibit competition for 12 months after termination of the employment contract, and the employee must hold a unique position of trust, justified in writing.
• The employment contract must be valid for more than six months.
• The employer must provide the terminated employee severance pay while the clause is valid.

Nonsolicitation clauses.

• Can only prohibit solicitation for 12 months after termination of the employment contract, and can only apply to clients with whom the employee has had contact in the previous 12 months before termination.
• The employment contract must be valid for more than six months.
• The employer must pay the employee severance pay while the clause is valid.

Combined clauses.

• The clause cannot be valid for more than six months after termination, and all of the above conditions apply.

BAL Analysis: Companies should review their employment contracts to make sure they are in compliance with the requirements before applying for work permits or other immigration benefits.

This alert has been provided by the BAL Global Practice group and our network provider located in Denmark. For additional information, please contact your BAL attorney.

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