Competition in the labor market

The Portuguese Competition Authority (“PCA”) has fined the Portuguese Association of Private Sector Employment and Human Resources Companies (“APESPE”) for including a non-solicitation (no-poach) clause in its code of ethics.

According to the PCA’s decision, between 1987 and 2025, member companies of the temporary employment agencies agreed not to solicit one another’s employees. This agreement restricted employee mobility within the temporary work market. Specifically, APESPE’s members account for over 70% of the organized temporary labor market and approximately 60% of the sector’s total turnover.

Impact of no-poach clauses on the labor market

In practice, no-poach clauses and agreements restrict both companies’ commercial freedom and employees’ mobility. By agreeing not to recruit employees from competitors, employers effectively remove one of the primary sources of competitive pressure in the labor market: competition for talent. This can lead to lower salaries, poorer working conditions and fewer opportunities for career advancement.

When such coordination occurs through business associations, the effects can extend across much of the organized labor market. For this reason, the PCA classified the no-poach clause as a restriction of competition by object, making it unnecessary to demonstrate actual market effects to establish an infringement.

Also, the Portuguese Labor Code expressly prohibits restrictions on freedom of employment. Therefore, any agreement between employers that prevents the hiring of a current or former employee, or that requires compensation upon hiring, is legally null.

Implications for APESPE and its members

The PCA fined APESPE €4,519,000, calculated based on its member companies’ aggregate turnover. Although the association received a 15% reduction for voluntarily removing the non-solicitation clause at its general meeting, it did so only after becoming aware of the proceedings.

When calculating fines, the PCA considers factors such as the severity and duration of the infringement. For associations with broad sectoral representation — such as APESPE, which has 39 members — liability can escalate rapidly because the calculation is based on its members’ aggregate turnover.

For this reason, boards of directors and management teams should be aware that association decisions capable of restricting competition may give rise to substantial fines, proportionate to the association’s economic weight in the respective sector.

What companies and associations should do

Given the PCA’s increased enforcement focus on the labor market — identified as a priority area for 2026 — companies and business associations should adopt a preventive compliance approach.

Agreements that restrict the hiring of competitors’ employees are permissible only in limited circumstances and must be carefully assessed based on necessity, proportionality and duration. In this case, the PCA rejected APESPE’s argument that it had acted under a mistaken belief as to the clause’s lawfulness. Specifically, the authority stressed that, although enforcement in this area has intensified in recent years, the prohibition on competition-restricting agreements predates the infringement, which began in 1987. In other words, the novelty lies in enforcement priorities, not in the underlying legal rule.

The decision also clarifies that codes of ethics are not neutral when it comes to competition. Rules that restrict members’ freedom, especially in talent recruitment, create immediate legal risk. That is why regular reviews of internal rules and clear documentation of decision-making processes are essential.

Conclusion and practical recommendations

Companies and sectoral associations should carry out a comprehensive review of their codes of conduct, internal regulations and self-regulatory instruments to identify and remove any provisions that restrict employee mobility, including non-solicitation (no-poach) or non-hiring (no-hire) clauses.

Robust competition-law and labor-law compliance programs are the most effective safeguard against regulatory and reputational risk in this area.