Category Archive: Post-contractual non-compete

Act of defiance or effective waiver of rights?

Due to the compulsory compensation payments, post-contractual non-competes are only common in Germany with regard to key employees with significant knowledge of the employer’s business or close client relationships. However, they are quite often the subject matter of legal disputes. Just recently the Federal Labour Court (Bundesarbeitsgericht, BAG) has ruled on the question of the …

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Penalty clause unenforceable where non-compete obligation is invalid

If a post-contractual non-compete obligation is invalid and therefore non-binding, a penalty clause intended to protect this clause is unenforceable (judgment of the Solingen labour court dated 20 June 2017, docket number 3 Ca 153/17). The employee worked for a travel agent and had mainly sold cruises. The employee’s contract included a post-contractual non-compete obligation …

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Non-compete clauses – No Compensation for Abstention – Severability Clause

Non-compete provisions valid for the period after an employment relationship has ended are invalid unless the agreement provides for a compensation payment of 50% of the employee’s former salary during the entire duration of the post-contractual non-compete obligation. This decision by the German Federal Employment Court (docket no. 10 AZR 448/15, dated March 22, 2017) …

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Federal Labor Court rulings to watch in 2017 (edition Jan – March)

Already in the first quarter of the New Year Germany’s Federal Labor Court will deliver a number of judgments important for advisors and practitioners alike: Time Credits for works council members? (- docket no 7 AZR 224/15 – expected for 18 January 2017- ) Although members of a works council act in an honorary role …

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Investigations by a Detective create (not only) Data Privacy Issues

The Higher Labour Court of Baden-Württemberg (Landesarbeitsgericht Baden-Württemberg, docket number 4 Sa 61/15) decided on 4 July 2016 that the employer´s instruction of a private detective to investigate its suspicion of unlawful behaviour of its employee infringed German data privacy rules. The detective´s findings must not be used as evidence of the employee´s breach of …

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Financial compensation entitlement for post-contractual non-compete based on standard saving clause

In German law, a post-contractual non-competition agreement with an employee is only effective if it provides the employee with appropriate financial compensation. The financial compensation must amount to at least 50% of the previous income. If no such compensation is provided, the post-contractual non-competition clause is, by force of law, invalid.   Nevertheless, the Hamm …

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