Danish Act on Restrictive Employment Covenants now adopted

The bill on restrictive employment covenants that was introduced by the Danish Ministry of Employment on 7 October 2015 has been read and adopted by the Danish Parliament on 10 December 2015.

On 18 November 2015, the Ministry of Employment had submitted a report containing a number of proposed amendments to the bill. However, these proposals were rejected and the bill was thus finally adopted without amendments.

The new Act on Restrictive Employment Covenants is applicable to all clauses entered into after 1 January 2016 or later. The previous and less restrictive rules are still applicable to all agreements on restrictive employment covenants entered into before that date.

Consequently, employers ought to update all their standard employment contracts to bring them into compliance with the new rules. In this connection, it is equally important to remember that the rule on retirement at the age of 70 has also been repealed with effect as of 1 January 2016. From this date, it will no longer be possible to maintain individual agreements on automatic termination of employment when the employee reaches the age of 70. Therefore, such provision must be deleted from all employment contracts before 31 January 2016.

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