Non-compete clauses

A daily briefing on European HR, labour law and compliance developments for SME HR teams across the EU, UK, Switzerland and the Nordics. Top story: EU AI Omnibus defers high-risk HR deadline but transparency obligations are live The EU's Digital Omnibus on AI (Regulation (EU) 2026/1744) entered into force on 27 July 2026, just days before the original 2 August deadline for high-risk AI system obligations. The most consequential change for HR teams: the compliance deadline for all stand-alone high-risk AI systems listed in Annex III of the AI Act, which includes AI used in recruitment, CV screening, candidate ranking, performance evaluation and termination decisions, has been pushed from 2 August 2026 to 2 December 2027. AI systems embedded in regulated products receive a further extension to 2 August 2028. The deferral is not a free pass. Article 50 transparency obligations took effect on 2 August 2026 as originally planned. Employers deploying AI systems that interact with employees or candidates, such as chatbots used in recruitment or internal HR queries, must now disclose the AI nature of those interactions. AI systems that generate synthetic content must apply watermarking, with a grace period until 2 December 2026 for systems already on the market before 2 August. The Omnibus also introduces proportionate compliance pathways for SMEs, including simplified technical documentation and quality management obligations. Penalties remain significant: up to €15 million or 3% of global annual turnover for breaching high-risk obligations, and up to €35 million or 7% for prohibited practices. What to do: Update your AI compliance roadmap. If you use AI in any HR process (screening, scheduling, performance analytics, chatbots), ensure you meet the transparency obligations that are already live: disclose to employees and candidates when they're interacting with an AI system. Use the extended deadline to December 2027 to prepare for the full set of high-risk requirements, including risk management, human oversight, bias testing and technical documentation. German employers with works councils should note that these transparency obligations may trigger co-determination rights under Sections 87 and 90 of the Works Constitution Act. Also developing Germany: On 2 July 2026, the coalition committee announced a sweeping "Programme for Economic Recovery and Employment" that includes major changes to fixed-term contracts and dismissal rules. Fixed-term contracts without objective justification may now last up to 48 months (doubled from 24) and be extended up to six times (up from three), for hires completed by 31 December 2030. From 1 January 2027, the written form requirement for fixed-term contracts will be abolished, and a new simplified dismissal option will apply to employees earning above €177,450 gross annually, allowing termination in exchange for a moderate severance payment. The reforms aim to reduce administrative burden and increase hiring flexibility, particularly for smaller employers. What to do: German employers should review fixed-term contract strategies in light of the expanded flexibility. The 48-month duration and six-extension limit significantly reduce the need for objective justification in many hiring scenarios. Spain: Royal Decree 416/2026 on flexible retirement takes effect on 28 August 2026, allowing retirees to combine their pension with self-employment for the first time. Part-time work is now permitted up to 80% of full-time hours, and the previous waiting period has been removed. Pensioners who take up part-time employment at least six months after retiring are eligible for a 15% or 25% bonus on their adjusted pension, depending on hours worked. The reform applies across all pension regimes except civil servants, military personnel and justice administration staff. What to do: Spanish employers should update HR processes to accommodate applications from pensioners seeking part-time roles. Payroll teams will need to verify the new pension-employment compatibility requirements for any post-retirement hires. UK: From 1 October 2026, right to work check obligations will expand significantly under the Border Security, Asylum and Immigration Act 2025. Employers will be required to conduct checks not only on employees but also on casual workers, zero-hours workers, gig economy workers and, in some cases, subcontractors. Civil penalties rise to up to £60,000 per illegal worker, and liability now extends into supply chains: businesses can be fined even where the illegal working occurs further down a chain of subcontracts. The Home Office has published a draft Code of Practice for consultation. What to do: UK employers, particularly those using agency workers, contractors or platform-based labour, should audit their current right to work processes now and identify any gaps in coverage. The five-week preparation window is tight for businesses with complex supply chains. Netherlands: The Bill to modernise non-competition clauses (Wet modernisering concurrentiebeding) was submitted to the Council of State for its advisory opinion at the end of June 2026, with the government aiming to send it to Parliament by the end of the year. The bill proposes a maximum one-year duration for non-compete clauses, mandatory employer justification in all employment contracts (not just fixed-term, as under current law) and a requirement for employers to pay 50% of the employee's last monthly salary for each month the clause is enforced. In practice, non-compete clauses would be justifiable only for senior employees or those with access to confidential business information. What to do: Dutch employers relying heavily on non-competition clauses should begin reviewing which clauses serve a genuine business interest and prepare for the likely cost of enforcement. The bill is not yet law, but its direction is clear. On the radar Ireland My Future Fund opt-out (previously covered): window closes at the end of August 2026. UK tribunal time limits (previously covered): double from three to six months on 1 October 2026. UK third-party harassment duty (previously covered): employers become liable for harassment by customers and clients from 30 October 2026. EU Platform Workers Directive (previously covered): member states must transpose by 2 December 2026. Sources White & Case: EU AI Omnibus enters into force, amending the AI Act Gibson Dunn: EU AI Act Omnibus Agreement, postponed high-risk deadlines and other key changes Crowell & Moring: artificial intelligence and human resources in the EU, a 2026 legal overview Orrick: German government reform package, more flexibility for employers Bird & Bird: Germany's programme for economic recovery and employment Garrigues: flexible retirement, more incentives and new formulas from 28 August 2026 The Local Spain: the changes to Spain's flexible retirement scheme DLA Piper: right to work compliance expands beyond employees Travers Smith: upcoming changes to right to work checks from 1 October 2026 Baker McKenzie Global Workplace Insider: reform of Dutch non-competition clauses Holland Times: non-compete clauses overhauled Europe HR Compliance Pulse is an informational summary of publicly reported legal and regulatory developments. It is not legal advice. Always confirm obligations for your specific situation and market with a qualified adviser.