No-Poach Clauses in a Business Transfer: Can You Stop a Buyer From Hiring Your Employees?

Share sensitive information about your business with a potential buyer during a sale process — including insight into who your strongest employees are — and it's natural to worry whether the buyer can simply hire them afterward, even if the deal never happens. Here's what the law actually says, under Danish rules.

The main rule: no-poach clauses have been banned since 2016

A no-poach clause is an agreement between two businesses that one won't hire the other's employees. Since January 1, 2016, entering into this kind of agreement has generally been illegal in Denmark, as part of a general tightening of the rules on employment clauses.

The exception: business transfers

There's a specific and relevant exception for exactly your situation: in connection with negotiations about a business transfer, the seller and a potential buyer can lawfully agree to a no-poach clause. The reasoning is straightforward — when you negotiate a sale, you typically open up to each other about value, resources, employee matters and other trade secrets, and it's that insight the no-poach clause is meant to protect against being misused if the deal doesn't happen.

What conditions must be met?

• Seniority requirement: The employees covered by the clause must have at least 3 months' seniority at the business to be included.
• Time limit: A no-poach clause entered into in connection with a business transfer can be maintained for up to 6 months — and this applies regardless of whether the transfer is actually completed or not.

What does this mean in practice?

If you enter negotiations about a sale, you can agree that the potential buyer, for a period of up to 6 months, may not hire named employees or groups of employees who've been part of the sale discussions — regardless of whether the deal ends up going through. That gives you as seller some assurance that a buyer doesn't use the insight the negotiations provide to simply poach your best people without completing the deal itself.

What can't a no-poach clause be used for?

The clause is an exception, not a general license to tie down employees. It only applies in connection with the specific transfer process, not as a general shield against other businesses in the industry hiring your employees outside a sale situation. Outside this exception, no-poach clauses generally remain illegal.

How do you draft a valid no-poach clause?

The agreement should be entered into in writing, ideally as part of the initial non-disclosure agreement or a standalone agreement at the start of negotiations — not only once negotiations are already underway. Be clear about which employees or groups are covered, and explicitly note the duration of up to 6 months.

Frequently asked questions

Are no-poach clauses illegal in Denmark?

Generally, yes, since January 1, 2016 — but there's a specific exception for no-poach clauses entered into in connection with negotiations about a business transfer.

How long can a no-poach clause in a business transfer last?

Up to 6 months, regardless of whether the transfer is actually completed or the negotiations fall through.

Can I create a no-poach clause covering all employees, regardless of seniority?

No. Only employees with at least 3 months' seniority at the business can be covered by a no-poach clause entered into in connection with a transfer.

Considering sharing sensitive employee information with a potential buyer? Also read about what a non-disclosure agreement (NDA) should include, or book a no-obligation call if you'd like help drafting a no-poach clause correctly.