Non-Compete and Confidentiality Clauses for Employees and Managers in Montenegro: What Articles 161 and 162 of the Labour Law Allow an Employer to Enforce, Why an Unpaid Post-Employment Non-Compete Is Void, What the 2021 Trade Secrets Act Protects Without Any Clause, and How to Draft for Both

The non-compete clauses that foreign-owned companies in Montenegro ask me to enforce usually come from a group template written for another system, and I rarely can enforce them as written: unlimited in territory, three years long, unpaid, and signed by every employee. Montenegrin law upholds little of that. The Labour Law allows a non-compete during employment only for employees whose work gives them especially important knowledge, a wide circle of business partners or access to important business information, requires the territory to be fixed, and allows a post-employment non-compete only for two years and only where the employer undertakes in the employment contract to pay monetary compensation for it. Confidentiality is treated more generously: the employer may dismiss without procedure for disclosure of a business secret defined in its internal act, the Trade Secrets Act of 2021 protects secret information of commercial value without any clause where the holder took appropriate measures, and the Criminal Code punishes disclosure. This page sets out what binds whom, from the statutes, and how to draft for the employer and for the company that hires from a competitor.

Sources, checked 11 September 2026. Labour Law (Official Gazette of Montenegro 74/19 to 145/21), Articles 161, 162 and 172; Law on the Protection of Trade Secrets (145/21), Articles 1, 2, 4, 5, 7, 9, 11, 16, 18 and 19; Law on Obligations (47/08 to 94/26), Articles 23 and 277 to 283; Criminal Code, Article 280 in the consolidated text through the 2020 amendments.

During employment: Article 161

Article 161 of the Labour Law lets the employment contract define the jobs the employee may not perform in their own name and for their own account, or in the name and for the account of another legal or natural person, without the employer's consent, and calls that the prohibition of competition. It may be agreed only where the conditions exist for the employee, through work with the employer, to acquire new and especially important technological or other specific knowledge or skills, a wide circle of business partners, or possession of and insight into important business information and secrets. The collective agreement or the employment contract also fixes the territorial scope of the prohibition according to the type of work it covers. And where the employee breaches a prohibition agreed in the employment contract, the employer may terminate the contract and claim damages. Three drafting consequences follow. The clause must be in the employment contract, not in a policy. It binds only employees whose position meets the second paragraph, so the receptionist's clause is void and the sales director's is not. And it must name a territory; a clause without one is incomplete on the statute's own terms.

After employment: Article 162 and the price of the clause

Article 162 lets the employer and the employee agree, in the employment contract or in the agreement on termination, a prohibition of competition within the meaning of Article 161 after the employment ends, for a period that cannot exceed two years from the end of the employment. It then sets the condition that most foreign templates fail: the post-employment prohibition may be agreed only if the employer undertakes in the employment contract to pay the employee monetary compensation in an agreed amount. An unpaid post-employment non-compete is therefore not merely weak; it is outside what the statute allows. The amount is not fixed by the law and is a matter of negotiation, but it must be stated, and it is paid for the restricted period. The clause may be agreed at hiring or at departure, which lets an employer that omitted it buy it at the termination agreement, at a price. The Labour Law does not contain a separate rule on penalties for breach; the penalty attached to the clause follows the general rules of the Law on Obligations, under which a penalty is payable without proof of loss, the court reduces it at the debtor's request where it is excessive against the loss suffered, and no penalty may be attached to a monetary obligation, as set out on the penalty clauses page.

Dismissal for disclosure: Article 172

Article 172 of the Labour Law lets the employer terminate the employment contract without conducting a procedure to establish responsibility where there is a justified reason, and lists among the conduct that makes continued work impossible the disclosure of a business secret determined by the employer's act. The words that matter are the last ones: the secret must be defined in an act of the employer. A company that has no internal act naming what it treats as a business secret cannot use this ground, however obvious the leak. The act should define the categories of secret information, the persons who may access it, the marking and handling rules and the consequences of disclosure, and it should be brought to the employee's attention, because it is also the "appropriate measures" that the Trade Secrets Act requires.

The Trade Secrets Act of 2021

The Law on the Protection of Trade Secrets, published in Official Gazette 145/21 and in force on the eighth day after publication under Article 19, replaced the 2007 law on undisclosed information, which Article 18 repealed. Article 1 confines it to civil protection against unlawful acquisition, use and disclosure. Article 2 defines a trade secret by three cumulative limbs: information that, as a whole or in the precise configuration of its components, is not generally known or readily accessible to persons who deal with that kind of information in their line of work; that has commercial value because it is secret; and in respect of which the natural or legal person lawfully controlling it, the holder, has taken appropriate measures to keep it secret. The third limb is the one companies fail, and it is why the internal act under Article 172 and the confidentiality clause matter: they are the measures. Article 4 lists lawful acquisition, including independent discovery, observation and reverse engineering of a product made public or lawfully possessed without a restriction, and acquisition in accordance with good business practice, and treats acquisition, use and disclosure required or permitted by law as lawful; the entry on workers' information rights under European Union law is deferred to accession by Article 16. Article 5 makes acquisition without the holder's consent unlawful where it was by unauthorised access to, appropriation or copying of documents, objects, materials, substances or electronic files containing the secret, or contrary to good business practice; makes use or disclosure unlawful by a person who acquired the secret unlawfully, breaches a confidentiality agreement, breaches a contractual obligation limiting use, or breaches an obligation not to disclose; extends to producing, offering, marketing, importing, exporting or storing infringing goods where the person knew or should have known; and reaches downstream recipients who knew or should have known that the secret came from an unlawful source. Article 7 lets the holder or a licensee seek interim measures before filing suit, including cessation or prohibition of use or disclosure, prohibition of dealing in infringing goods and provisional seizure or delivery up; Article 9 requires the applicant to make it probable that the secret exists, that the applicant holds it, and that it was or is about to be unlawfully acquired, used or disclosed, and tells the court to weigh the value and specificity of the secret, the measures taken to protect it and the conduct of the alleged infringer. Article 11 gives the action three years from knowledge of the breach and the infringer and at most five years from the breach, and lists the final remedies: cessation or prohibition, prohibition of dealing in infringing goods, recall, removal of the infringing characteristic, destruction or withdrawal, and destruction or delivery up of the documents and files containing the secret. The Act's application to software and technical information, and the case law that has not yet formed around it, are on the trade secrets page.

Negotiations, penalties and the criminal law

Article 23(5) and (6) of the Law on Obligations bind a party that received confidential information in negotiations, or was given access to it, not to disclose it to third parties or use it for its own interests, whether or not a contract is later concluded, and make it liable for the loss and for the surrender of the benefit obtained; a company that shares its know-how with a prospective distributor or a candidate for acquisition is protected before any agreement is signed. Articles 277 to 283 of the same Law govern the penalty a confidentiality or non-compete clause carries: payable without proof of loss, reducible by the court where excessive against the loss suffered, and lost for delay if performance is accepted without reservation. And Article 280 of the Criminal Code, in the consolidated text through the 2020 amendments, punishes with imprisonment from three months to five years a person who without authority communicates, hands over or otherwise makes available data constituting a business secret, or procures such data with the intention of handing them to an unauthorised person, punishes the unauthorised recipient who uses them, raises the range to two to ten years where the act was committed for gain, concerned especially confidential data or was aimed at publication or use abroad, and punishes negligent commission with up to three years.

Directors and managers

A director employed under an employment contract is an employee for Articles 161 and 162, and a post-mandate non-compete for such a director is valid only within the two years and against compensation. A director engaged under a management contract without employment is outside the Labour Law, and their non-compete and confidentiality obligations are a matter of the management contract and the duties the Companies Act imposes on directors, on the directors' duties page, tested against the general limits of the Law on Obligations rather than Article 162. Which of the two a given director is should be settled in writing at appointment, because it decides whether the group's standard non-compete is void or enforceable.

Drafting for the employer

Put the non-compete in the employment contract, confine it to employees whose role meets Article 161(2), and say in the clause what knowledge, partners or information the role gives access to. Fix the territory, the period and the activities covered. For the post-employment restriction, state the monetary compensation and the period, at most two years, and pay it, since Article 162(2) makes the undertaking to pay the condition of validity. Attach a penalty at a level the court will not cut. Adopt an internal act that defines the company's business secrets, brings it to each employee's attention and records the measures taken, because Article 172 and Article 2 of the Trade Secrets Act both turn on it. Write the confidentiality clause separately, without a time limit, with a return and deletion obligation. And when an employee leaves, send the written reminder of the continuing obligations and keep the acknowledgment, which is the evidence for Article 9 of the Trade Secrets Act when interim measures are needed.

Drafting for the hiring company

A company hiring from a competitor reads the candidate's clause against Articles 161 and 162: whether it is in the employment contract, whether the role met the statutory conditions, whether the territory was fixed, whether the post-employment period is within two years, and above all whether compensation was undertaken and paid. An unpaid post-employment clause does not bind. But the hiring company should keep the candidate away from the former employer's documents and data whatever the clause says, because Article 5(5) of the Trade Secrets Act reaches the recipient who knew or should have known where the information came from, and Article 280 of the Criminal Code reaches the user.

When the clause is tested

A non-compete case turns on the contract, the role, the territory, the period and, after employment, the compensation; a trade secrets case turns on the three limbs of Article 2, above all the measures taken, and on the timing of the interim measures under Articles 7 and 9. The employer's file is the employment contract, the internal act on business secrets, the acknowledgments, the access logs and the correspondence. The legal function these pages belong to is described on the outsourced legal department page, and who may sign the employment contract and the termination agreement for the company on the signing authority page.

Whose side we are on, and how we are paid

The group's template was drafted for another legal system and signed by everyone, unpaid. The human resources manager never adopted an act defining the company's business secrets, so the dismissal for disclosure has no ground. The new employer took the customer list along with the employee and is now the recipient under Article 5(5). None of them is paid to tell you, before the signature or the leak, that the clause binds only some of your staff, that the post-employment restriction is void without compensation, or that the secret was protected by statute if you had taken the measures and is not protected at all if you did not.

We take no commission or referral fee from recruiters, counterparties or employees, in any form, on any file. The fee you pay us is our only income from your matter, and it does not depend on whether a clause is enforced or a claim is brought. Because our position does not move with the outcome, telling an employer that its non-compete is void, or a hiring company that its new recruit is bound, costs us nothing to say.

One boundary, stated plainly. We are lawyers, not licensed investment advisers and not recruiters. We do not decide whom you hire or dismiss. What we protect is the Montenegrin legal position: a clause that meets Articles 161 and 162, compensation that makes it valid, an internal act that makes disclosure a ground for dismissal and the secret a trade secret, and the measures that let a court act quickly when information leaves.

Before the next contract is signed or the next employee leaves

Send us the employment contracts, the group's template, the role descriptions of the employees concerned, any internal act on business secrets and, where someone has already left, the termination correspondence. We will tell you which clauses bind under Montenegrin law, which are void, what the internal act must say, and what step protects the company's information now. Our corporate work in Montenegro is described on the Montenegro lawyer page.

What this page does not settle

Non-compete clauses in distribution, agency, franchise and shareholder agreements, competition law limits on such clauses, the detail of termination procedures and severance, the employee's own claims on termination, patents, designs and copyright, data protection in internal investigations, and the conduct of litigation are separate subjects. The Criminal Code article number should be checked against the consolidated text in force at the date of the conduct.