Restrictive covenants in Sweden and Britain – a comparative analysis

Sammanfattning: The purpose with this thesis is to analyse restrictive covenants in employment contracts and see how they are used in Sweden and in Britain. I aim to do a comparative analysis between the two jurisdictions to see how the use of such covenants differs and is similar. The study is confined to covenants, which concern circumstances after the term of employment. I will focus on the use of non-compete and non-solicitation covenants and I will only briefly mention how restrictions regarding secrecy and company secrets are regulated. The subject of restraint of trade has been widely discussed for a long time. Employers, on the one hand, want to protect their company-specific knowledge and limit the competition while employees, on the other hand, want to have the freedom to work anywhere they want. I will analyse whether the principle of free trade and competition or the principle of freedom of contract usually is accorded the most consideration. An employee’s right to work wherever he pleases can be limited in both jurisdictions subject to this thesis. By looking at important Swedish and British cases on the matter, I will discuss the circumstances where restraint of trade can be accepted. I will begin by describing the different legal systems; the common law system in Britain and the civil law system in Sweden. Furthermore, I will explain the doctrine of restraint of trade and look at how it has developed in Britain and Sweden respectively. Then I will look at how the doctrine of restraint of trade is legislated in the two jurisdictions and try to see what legal sources the courts usually apply when determining the validity of a restrictive covenant. Since I am describing the historical background behind the British legal system and the Swedish legal system, I will analyse the differences between how restrictive covenants are viewed – from a common law/civil law perspective. In my analysis, I will focus on the protectable interests in Sweden and Britain and try to highlight the differences and similarities. I will also discuss how the scope of protection regarding a restrictive covenant is determined with regards to restriction in time, geographical restriction, scope of clients/customers, areas of business and employee consideration. Lastly, I will list the most important factors to consider when drafting restrictive covenants in Sweden and Britain respectively.