Non‑compete vs Non‑solicit in Finland: Which Should Employers Use in 2026?

Every employer hiring a senior executive in Finland faces the same contractual fork in the road: include a non‑compete clause that bars the departing employee from joining a rival, or opt for a non‑solicitation clause that only prevents the employee from poaching clients, staff or suppliers. The question of non-compete vs non-solicit in Finland has become sharply financial since the January 2022 amendment to the Employment Contracts Act, which made employer compensation obligatory for post‑employment restraint periods. That statutory change, combined with ongoing practitioner guidance issued through 2024 and 2025, means the decision now turns on cost as much as enforceability.

This article delivers a side‑by‑side comparison, a dimension‑by‑dimension analysis of enforceability in Finland, a concrete decision framework, and a drafting checklist so that HR directors, general counsel and foreign CFOs can make the call, or know exactly when to engage counsel.

Option A: The Non‑compete Clause, What It Is, When It Applies, Who It Suits

A non‑compete clause in Finnish employment law is a contractual term that prohibits an employee, for a defined period after employment ends, from working for a competing business or establishing one. The Finnish Employment Contracts Act permits such clauses only where there are “particularly compelling reasons” connected to the employer’s operations or the nature of the employment relationship. Those reasons must be assessed at the time the agreement is made and again when it is enforced. Typical justifications include the employee’s access to trade secrets, proprietary R&D processes or strategically sensitive commercial data that would cause measurable harm if transferred to a competitor.

Non‑competes suit a narrow band of roles: founders subject to a business‑sale earnout, R&D directors who carry genuinely proprietary know‑how, or C‑suite officers whose departure to a direct competitor would itself constitute a competitive event. Where none of these conditions is met, the clause risks being declared void, leaving the employer exposed to compensation obligations that may survive even an unenforceable restraint.

Practical Red Flags

• Overbroad activity definitions. Clauses that bar “working in the same industry” without geographic or functional limits face heightened invalidity risk.
• Excessive duration. Restraint periods exceeding 12 months draw intense judicial scrutiny; courts may reduce or void the clause entirely.
• Missing compensation language. Since January 2022, any non‑compete clause that omits the employer’s compensation obligation is structurally deficient and likely unenforceable.
• No documented justification. Employers should maintain a file note, contemporaneous with execution, explaining the “particularly compelling reasons” for the restraint.

Typical Remedy and Enforcement Forum

Non‑compete disputes are heard by Finnish general courts. Employers may seek injunctive relief (interim measures) and damages. Where the parties have agreed to arbitration in the employment contract, enforcement can proceed through an arbitral tribunal, an option that offers confidentiality but requires careful drafting to survive scrutiny under Finnish procedural rules. Contractual penalties for breach are permitted but courts may moderate disproportionate penalties.

Option B: The Non‑solicit Clause, What It Is, When It Applies, Who It Suits

A non‑solicitation clause restricts a departing employee from actively soliciting the employer’s customers, employees or suppliers for a defined period. Unlike the non‑compete, the non‑solicit does not prevent the employee from joining or establishing a competing business, it only prohibits targeted approaches to protected relationships. This distinction is both its commercial advantage and its drafting risk: practitioner commentary consistently warns that a broadly worded non‑solicit can be treated by Finnish courts as a de facto non‑compete, triggering the same statutory tests and compensation obligations.

Non‑solicitation vs non‑compete drafting therefore demands precision. A clause that bars an employee from “having any business contact with any customer of the company” may cross the line into restricting competitive employment itself. By contrast, a clause that identifies a defined customer list, limits protection to accounts the employee personally managed during the final 12 months, and carves out inbound or passive approaches is far more likely to survive challenge.

Common Enforceable Scopes

• Named customer lists. Restricting solicitation only of customers the employee serviced, with a defined look‑back window.
• Employee non‑poaching. Preventing the departing employee from hiring or inducing departure of former colleagues, typically limited to the same department or direct reports.
• Defined solicitation methods. Prohibiting direct outreach (calls, emails, meetings) while permitting passive interactions (responding to inbound enquiries, general marketing).
• Time‑limited protection. Six to twelve months is standard market practice; shorter periods face fewer challenges.

Why Non‑solicit Is Often Preferred for Executives

For many executive roles, the pros and cons of non‑solicit clauses tilt in the employer’s favour on cost. Because a narrowly drafted non‑solicit restricts specific conduct rather than employment itself, the compensation obligation may be proportionately lower, or, where the clause is genuinely narrow, may not trigger the statutory compensation requirement at all. Industry observers expect this cost differential to continue driving employers away from blanket non‑competes and toward targeted non‑solicits, particularly for sales directors, account managers and recruitment‑facing leadership roles.

Non‑compete vs Non‑solicit, Side‑by‑Side Comparison

The following anchor table compares every decision dimension that matters when choosing between non-compete vs non-solicit in Finland. Use it as a quick reference before reading the deeper analysis below.

Key trade‑offs to note:

• A non‑compete gives the broadest protection but carries the highest cost, drafting burden and invalidity risk.
• A non‑solicit is cheaper, faster to enforce and less likely to be voided, but only if it is drafted narrowly enough to avoid recharacterisation as a non‑compete.
• Compensation for non-compete clauses in Finland is now mandatory regardless of enforceability; opting for a non‑solicit can materially reduce this budget line.
• Neither clause replaces a well‑drafted confidentiality (NDA) and intellectual‑property assignment clause, which should always run alongside any post‑employment restraint.

Dimension‑by‑Dimension Analysis

Cost and Compensation

The January 2022 amendment introduced a statutory obligation for employers to compensate employees for all post‑employment restraint‑of‑trade agreements. The statute does not prescribe a fixed percentage or formula; instead, it requires “appropriate” compensation. In practice, the amount is negotiated between employer and employee, with courts stepping in where disputes arise. The compensation is treated as taxable earned income, and standard employer social‑security contributions apply.

The practical upshot: the broader your restraint, the higher the compensation cost. Employers who cannot justify a full non‑compete, or who balk at the associated compensation budget, should consider whether a narrowly drafted non‑solicit achieves sufficient protection at materially lower cost.

Enforceability and the Statutory Test

Finnish law applies a two‑stage enforceability framework for non-compete vs non-solicit clauses. For non‑competes, the Employment Contracts Act requires “particularly compelling reasons” related to the employer’s operations or the employment relationship, a threshold that must be met both at the time of signing and at the time of enforcement. The TEM Q&A guidance confirms that courts weigh the employee’s position and access to sensitive information, the nature of the employer’s business, the scope and duration of the restriction, and the compensation offered.

• Non‑compete: Courts apply proportionality review. Clauses restricting employment across an entire industry, without geographic limitation or role specificity, are routinely narrowed or voided. Employers must maintain contemporaneous documentation of the “particularly compelling reasons.”
• Non‑solicit: No equivalent statutory threshold exists, but enforcement still requires reasonableness. A non‑solicit that is so broad it effectively prevents the employee from performing any competitive role will be treated as a non‑compete and subjected to the same statutory test. Practitioner commentary emphasises that the distinction turns on practical effect, not the clause’s label.

Liability and Remedies

Both clause types expose the parties to reciprocal risks. For the employee, breach may trigger contractual penalties and damages claims. For the employer, the primary liability risks are: paying compensation for an unenforceable clause (the obligation can survive even if the clause itself is voided), and litigation costs if enforcement fails.

• Non‑compete: Higher exposure, courts may void the clause while ordering the employer to honour compensation already accrued. Contractual penalties are enforceable but subject to judicial moderation if disproportionate.
• Non‑solicit: Lower exposure if narrowly drafted, the employer can seek targeted injunctive relief against specific solicitation acts, and damages tend to be quantifiable (lost revenue from diverted clients).

Timing and Duration

Duration is the single strongest predictor of enforceability risk. Both clause types are typically drafted at six to twelve months. Restraints exceeding twelve months face a materially higher probability of judicial reduction or invalidity. Best practice is to align the restraint period with the realistic half‑life of the protected interest: six months for client relationships that churn quickly; twelve months for trade secrets with longer commercial value.

• Calendar trigger: The restraint period begins on the last day of active employment, not at the end of garden leave or notice period, unless the clause explicitly provides otherwise.
• Termination for cause: Where the employer terminates the employment for cause, the enforceability of the restraint may be weakened; confirm the clause addresses this scenario.

Drafting and Regulatory Burden

The drafting burden differs sharply between the two options. Employers drafting executive agreements in Finland should treat the following checklist as a minimum for either clause type:

• Non‑compete: Document compelling reasons in a contemporaneous file note; specify scope by role, activity and geography; include a compensation mechanism with payment timing (monthly vs lump sum); add a blue‑pencil or severability clause; provide for employer waiver rights (with notice period) to escape the compensation obligation if the restraint is no longer needed.
• Non‑solicit: Define “solicitation” precisely (active outreach vs passive contact); identify protected persons by name or category with a look‑back window; carve out inbound customer contact; include a severability clause; consider whether the scope is narrow enough to avoid recharacterisation as a non‑compete.

For both types, retain negotiation records, signed acceptance evidence and board or management approval where applicable. These records are critical if the clause is later challenged.

What Changes in 2026

No new statutory amendment to the Finnish Employment Contracts Act regarding restraint clauses has been enacted for 2026. The January 2022 compensation obligation remains the governing framework. However, practitioner alerts issued through 2024 and 2025 have clarified several points of market practice that employers should incorporate into current drafting:

• Compensation structures have matured. Early indications suggest that monthly payment mechanisms, rather than lump‑sum payouts, have become the market norm, as they allow employer‑side waiver provisions to limit total cost.
• Recharacterisation risk is better understood. Practitioner guidance now specifically warns that broadly worded non‑solicits will be subject to the same statutory tests as non‑competes, including the compensation obligation. Drafters should treat this as settled practice, not a theoretical risk.
• Employer waiver clauses are standard. Most sophisticated employment agreements now include a provision allowing the employer to waive the restraint, and thereby terminate the compensation obligation, upon written notice before or shortly after the employment ends.

Employers with legacy contracts predating January 2022 should review whether those agreements comply with the compensation requirement; the obligation applies to restraints that take effect after the amendment’s effective date, regardless of when the contract was signed.

Decision Framework: Non‑compete vs Non‑solicit in Finland, When to Choose Each

Use the table below to match your commercial priority to the right clause. The framework reflects the enforceability and compensation trade‑offs described above.

Choose non‑compete when:

• The employee holds genuinely proprietary trade secrets or R&D knowledge that cannot be protected by NDA alone.
• The role is C‑suite or founder‑level and the employer can document “particularly compelling reasons.”
• You are prepared to pay statutory compensation and have budgeted accordingly.
• The restraint period is twelve months or shorter and the scope is limited to a defined competitive activity.

Choose non‑solicit when:

• Your primary concern is customer retention or preventing poaching of key staff.
• You want to minimise compensation cost and reduce litigation risk.
• The employee’s role is client‑facing rather than trade‑secret‑bearing.
• You need a clause that is more likely to survive judicial challenge without modification.
• Speed of enforcement matters, a targeted injunction against solicitation is faster and cheaper than litigating a broad non‑compete.

When to Engage a Lawyer

Many standard employment agreements can be drafted using well‑established templates. However, the following situations should trigger immediate engagement with a Finnish employment lawyer:

• Cross‑border executive hires. Where the employee will work across Finland and other jurisdictions, enforceability of restraint clauses requires multi‑jurisdictional analysis. Finnish law governs Finnish‑law contracts, but practical enforcement abroad adds complexity.
• Planned restraint periods exceeding 12 months. Longer durations face elevated invalidity risk and require particularly robust justification and compensation structures.
• Roles with mixed commercial and technical duties. Where it is unclear whether a non‑solicit or non‑compete (or both) is appropriate, a lawyer can assess which interests are genuinely protectable and draft accordingly.
• Arbitration‑based enforcement. If confidentiality is a priority and you want to enforce through arbitration rather than public courts, the arbitration clause must be carefully integrated with the restraint language.
• High compensation budgets or legacy contracts. Where the cumulative compensation exposure across multiple executives is significant, or where pre‑2022 contracts need to be reviewed for compliance with the statutory amendment, legal review is essential to limit financial risk.

When briefing counsel, bring: the draft or existing employment agreement, a description of the employee’s role and access to confidential information, the employer’s competitive landscape, any relevant client lists or revenue data, and the intended restraint duration and geographic scope.

Sources

1. Työ‑ ja elinkeinoministeriö (TEM), Questions and Answers on Restraint/Non‑Competition Agreements
2. Valtioneuvosto, Employers to Compensate Employees for All Restraint‑of‑Trade Agreements (2021)
3. Tekniikan akateemiset (TEK), Non‑solicitation Clauses Can Be Just as Restrictive as Non‑compete Clauses
4. MK‑Law, The New Compensation Obligation for Non‑compete Clauses and Older Employment Agreements
5. Lexia Growth, New Rules for Non‑Competition Clauses: What’s Changed
6. OECD, Competition Issues in Labour Markets (Finland)
7. RoihuLaw, Non‑Disclosure, Non‑Competition and Non‑Solicitation Clauses