No-poach agreement between employers: recruitment bans and antitrust risk

A no-poach agreement is indicated where two or more employers agree not to hire or actively approach each other's employees. It can be bilateral or multilateral, one-way or reciprocal. It may cover named people, a professional group, a location or an entire field of activity.

A no-hire agreement generally excludes hiring employees of another employer. A non-solicit agreement targets active approaches, while an employee's unsolicited application may be treated differently. These terms describe the scope of the clause. They do not automatically remove the competition-law risk.

The exact wording and the communication history are central to the first review. An oral understanding, internal instruction or coordinated practice can raise the same question as an express written clause. A recruiter or shared platform may also be involved in the practical implementation.

The agreement is particularly relevant to competition law when the employers compete for the same employees. The relevant labour market must be described by tasks, qualifications, regions and available employers. A reference to the same industry does not answer that question by itself.

Defining the labour market does not settle the agreement assessment. A regional or specialised arrangement can still restrict access to available employers. Conversely, the fact that businesses operate in the same industry does not establish a specific restriction without further facts.

Take particular care with trade-association meetings, joint recruiting processes and discussions about pay. If the parties also coordinate compensation, bonuses, willingness to hire or applicant data, additional competition-law issues may arise. Those information and compensation issues should be documented separately.

Section 1 of the Austrian Cartel Act provides the national framework for agreements and concerted practices that restrict competition by object or effect. Article 101 TFEU applies in addition where cross-border trade may be affected. Article 101(1) covers agreements that have as their object or effect the prevention, restriction or distortion of competition.

In Competition Policy Brief No 2/2024, the European Commission describes no-poach agreements as arrangements in which employers agree not to “steal” each other's employees. It distinguishes no-hire and non-solicit agreements and lists bilateral, multilateral, one-way and reciprocal forms. On the Commission's analysis, those distinctions do not necessarily prevent an object-restriction assessment.

A reliable case review therefore needs the agreement, the participating businesses, the affected labour market and the implementation. Labelling a clause an ancillary arrangement or recruiting standard is not enough to classify it.

An object restriction is assessed primarily through the content and purpose of the arrangement. The Commission points to a possible object-restriction classification for no-poach agreements. This is not a blanket outcome for every clause. It means that the competitive core of the actual arrangement must be examined at an early stage.

An effects assessment considers the labour market, scope, duration, participating employers, exceptions and actual hiring decisions. A project-related label therefore does not settle the issue. The function and the restriction that is actually protected must be clear.

An exemption under Article 101(3) TFEU requires a concrete assessment of its conditions. The Commission notes that efficiencies must be demonstrated and significant, while less restrictive means may generally be available. A general reference to recruiting costs or planning certainty is insufficient by itself.

Employers may have legitimate cooperation interests in a joint project. That does not create a general permission to ban hiring or approaches. The substantive, temporal and personal scope of any protective clause must fit the project.

Review the project agreement, services, teams, information access and cooperation period together. A clause covering every employee for an indefinite period raises different questions from a narrow rule for people directly assigned to the project. Even a narrow clause must be assessed by its purpose and effects.

The European Commission identifies possible less restrictive means such as confidentiality agreements, minimum-stay obligations, proportionate repayment of training costs, garden leave and non-compete clauses compliant with national labour law. The appropriate measure depends on the protection sought and the applicable national law.

Before approval, keep the draft, annexes, emails, meeting notes and internal sign-offs in a versioned file. Record who proposed the clause, which businesses are involved, which employee groups are covered and what protection is said to justify it.

For an agreement already in operation, include hiring freezes, refusals, forwarded applications, instructions to recruiting teams and contacts with recruiters in the chronology. Link each event to an employer, an affected person, a date and a specific rule.

Preserve original files and metadata. A later summary can make review harder if it obscures questions about scope, duration or practical effects. Evidence preservation should be organised separately from later litigation or authority communications.

After a challenge, record the sender, legal basis, challenged passage, requested response and any deadline from the complete notice. Keep the agreement in the version that was provided and identify internal responsibility for review and communication.

Deleting recruiting records or changing emails after the event can impair fact-finding. Technical preservation and internal access rules should therefore be coordinated with the legal assessment.

The cease-and-desist undertaking with a contractual penalty concerns a different unfair-competition remedy and does not replace the competition-law review of an employer agreement. Advertising self-evident features concerns another UWG issue.

Before signing, identify the employers involved and whether they compete for the same employees. Define the people, tasks, regions and period covered. Distinguish hiring, active approaches, unsolicited applications and contacts through third parties.

Record the specific protection sought and consider whether confidentiality, project-access controls, minimum-stay obligations or another proportionate measure would be sufficient. State exceptions, approval processes and termination of the rule clearly.

Repeat the review when the parties, project, recruiting process or scope changes. Approval of one draft does not automatically cover a later agreement or different implementation.