Competing activities during notice period can justify an immediate termination for cause

In its judgment dated 12 April 2017 (docket number 3 Sa 202/16), the Higher Regional Labour Court of Schleswig Holstein found that activities for a competitor during an employee’s notice period may justify an immediate termination for cause.
Under the employment contract, the employee had committed not to hold any shares of a company in direct or indirect competition with his employer without first obtaining prior approval. In addition, under a statutory non-compete obligation, an employee may not carry out competing activities to the employer’s disadvantage.

The employee was found to be in breach of both the contractual and statutory obligation. As he had been holding more than 50% of the shares in a competing company without getting prior approval, he had violated his contractual obligation. Whilst merely holding shares does not violate the statutory non-compete obligation as such, holding more than 50% of the shares, and thus having a major influence, does.

The court also found that the dismissal was justified after weighing the relevant interests of both the employer and the employee. The employee was a proxy holder at the employer, meaning that he had been authorized to represent the employer in important legal and business matters. In addition, he had been very active in his work for the competitor, and any additional day of employment with access to documents and information would have entailed further business risks for the employer.