Compensation for non-compete obligations

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Anyone who imposes a subsequent non-competition clause on their employees must also pay compensation for this, the so-called „compensation for waiting time“.
Two years ago, in the summer of 2015, the Hamm Regional Labor Court ruled that non-competition clauses are void if there are no agreements on compensation for parental leave.
In this specific case, however, the employment contract of a commercial clerk contained a severability clause stating that void clauses should in principle be replaced by valid clauses in the sense of the contracting party’s will.
The Higher Labor Court considered the non-competition clause to be effective despite the actually invalid clause (due to the lack of an agreement regarding compensation for waiting periods) and ordered the employer to pay compensation for waiting periods.

Federal Labour Court decides otherwise

Compensation for non-compete obligations/ Bild: Unsplash.com/Stoica Ionela

However, the Federal Labour Court in Erfurt has now ruled otherwise.
According to the judges at the Federal Labour Court, the ban on competition is void. The judges justified their decision by stating that a subsequent non-competition clause without the agreement of a compensation for waiting time is basically null and void.
The employer could therefore not demand that the employee work for the competition after leaving the company. On the other hand, however, the employee may not demand any compensation for a period of grace.
In the opinion of the Federal Labour Court, even a severance clause does not change this.
The Federal Labour Court referred to the fact that it must be clear to both the employer and the employee at the time of conclusion of the contract which regulations apply to the employment relationship. This also applies to any prohibitions of competition.
According to the judges at the Federal Labour Court, these must clearly result from the employment contract and not from a severability clause.

In concrete terms, the Federal Labour Court has thus decided that even in the absence of an agreement on compensation for parental leave, no severability clause can help to overcome this.
If there is no agreement on compensation for parental leave, the non-competition clause is also null and void and cannot be „saved“ by the severability clause.
Even if in this specific case the employee is at a disadvantage, this judgement is, however, basically a judgement which benefits the employees. Because the judgement creates clarity for employees, because a non-competition clause can have serious disadvantages, especially for employees who want or have to reorientate themselves professionally quickly.

Judgment of the Federal Labour Court of 22 March 2017 – Ref.: 10 AZR 448/15.


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The legislator has changed the period of entitlement to unemployment benefit by the third law for modern services on the labour market (Hartz III). However, due to the transitional provision in § 434 l SGB III, the change will not take effect until 01.02.2006. For employees/unemployed persons whose entitlement to unemployment benefit arises up to 31.1.2006, i.e. the unemployment must be present at the latest by 31.01.2006, § 127 SGB III in the version valid up to 31.12.2003 is to be further applied. The new version, which has been a law since 01.01.2004, therefore applies for the first time to terminations of employment relationships that were pronounced on 31.01.2006. READ OTHER

Up to 32 months of unemployment benefit under the old law


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Remember that!

As employment law cases should be solved quickly, we always have an initial consultation appointment immediately. If possible on the same day, otherwise the next day. Please write us a message or call us directly. You can reach us by phone from Mo-Fr in the time from 8 am to 6pm.

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