BAG: Post-contractual prohibition on competition invalid without a waiting allowance
Employment contracts can include post-contractual prohibitions on competition. In this case, the employee commits to not working for a competitor for a specified period time after the employment relationship has come to an end. In return for this commitment, he receives compensation referred to as a “waiting allowance” (Karenzentschädigung). According to the Bundesarbeitsgericht’s recent ruling, a post-contractual prohibition on competition is invalid in the absence of a waiting allowance. Even if the general terms and conditions include a severability clause, this will not render the prohibition on competition effective.
In the instant case, the plaintiff had worked for the defendant for several years. Both parties had agreed to a post-contractual prohibition on competition without a waiting allowance in the employment contract. The so-called “Nebenbestimmungen” (ancillary provisions) included a severability clause, according to which the contract remains effective in the event that a provision is invalid. Were this to happen, the invalid provision was to be replaced by a similar provision that most closely reflects the will of the parties within the scope of what is legally possible.
While the plaintiff did observe the prohibition on competition after the employment relationship came to an end, she also sued for payment of a monthly waiting allowance. Her claim was initially successful before the courts of lower instance, but ultimately failed before the BAG.
The ruling clearly demonstrates that the lack of a waiting allowance and the resulting invalidity of the prohibition on competition have consequences for both parties, since neither party is able to derive rights from an invalid prohibition on competition.
The BAG held that the employer had not been entitled to insist on its former employee not working for a competing firm. However, the plaintiff, who had nonetheless adhered to the prohibition on competition, was for her part not entitled to compensation. The Court went on to say that a severability clause could not make up for the violation of sec. 74 of Handelgesetzbuch (HGB) [Germany’s Commercial Code], not even to the sole benefit of the employee, and that a decision needed to have been made no later than immediately following the end of the employment relationship regarding compliance with the prohibition on competition. The BAG ruled that to this end it must be clear from the agreement whether this is valid or invalid. It also noted, however, that an evaluative decision needs to be taken in cases involving a severability clause.
If there is a post-contractual prohibition on competition in place, both the employer and the employee should ensure that it has been agreed in manner that is legally correct. Lawyers who are experienced in the field of employment law can offer advice.
GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.
Contact Michael Rainer
Lawyer, Managing Partner
GRP Rainer LLP
Phone: +49 221-27 22 75-0
This release was published on openPR.
Permanent link to this press release:
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.
You can edit or delete your press release BAG: Post-contractual prohibition on competition invalid without a waiting allowance here
News-ID: 501323 • Views: 1036
More Releases from GRP Rainer LLP
GRP Rainer Rechtsanwälte – Experience in establishing companies
Choosing the right corporate form when establishing a company can contribute a great deal to the economic success of the business. We at the commercial law firm GRP Rainer Rechtsanwälte advise numerous businesses on company formation and takeovers as well as in the event of a change of partners or shareholders. In our experience, the partners or shareholders frequently neglect one critical point amidst all the euphoria: choosing the right corporate
OLG Köln: Will written with non-dominant hand valid
It is possible for a will to be valid even if it was written with the hand one does not normally write with. That was the verdict of the Oberlandesgericht (OLG) Köln [Higher Regional Court of Cologne] in its ruling of August 3, 2017 (Az.: 2 Wx 149/17). In addition to preparing a notarized will, a testamentary disposition can also be handwritten. To this end, the will needs to be written
OLG Köln: Only serious misconduct justifies withdrawal from contract of inherit …
Apart from a will, it is also possible to prepare a contract of inheritance as a way of organizing one’s estate. It should be noted, however, that a contract of inheritance has a significantly stronger binding effect. In the absence of a will or contract of inheritance, the rules of intestate succession apply automatically following the death of the testator. If these run contrary to the testator’s wishes, a testamentary disposition
Commercial agent’s claim for compensation following voluntary termination
A commercial agent may even be entitled to compensation if he or she voluntarily issues notice of termination. However, the company’s conduct needs to give rise to legitimate grounds for termination for this to happen. When a commercial agency agreement is brought to an end, the commercial agent often has a right to compensation. This is because the company in a lot of cases continues to profit from the client contacts
More Releases for BAG
Cotton Bag Market is Leading in Global Industry by 2021| Direct Trade Bags, Bag …
Cotton Bag Market study by “Reportsweb” provides details about the market dynamics affecting the market, Market scope, Market segmentation and overlays shadow upon the leading market players highlighting the favorable competitive landscape and trends prevailing over the years. The report covers the prominent players in the market with detailed SWOT analysis, financial overview, and key developments of the products/services from the past three years. Moreover, the report also offers a 360º
Cebu Bag Sellers
Are you one of the many who is in love with all things designer? From clothes to shoes, and designer handbags, the world of fashion has so much to offer if you collect and are willing to spend your hard-earned money on these goods. Designer handbags are a class all their own. Not only are the top brands sought after anywhere in the world, but classic designs and models also remain
The Paper Bag initiates first European Paper Bag Day
“The Paper Bag” platform, Europe’s leading kraft paper manufacturers’ and paper bags producers’ association, springs into action by launching the VERY FIRST European Paper Bag Day on 18 October 2018. The annual action day aims to raise awareness among consumers about paper carrier bags as sustainable and efficient packaging of the future that contributes to fighting environmental pollution. “The Paper Bag” is looking forward to the first event in 2018. Paper
Garbage Bag Market
The competitive landscape of the market for garbage bag market is a mildly fragmented one marked with the presence of quite a few large players, according to a report published by Future Market Insights (FMI). The key players in the European garbage bag market are Novolasta, s.r.o Senkvice, Extrapack OOD, Pack-It BV, Achaika Plastic S.A., DAGOPLAST AS, Terdex GmbH, International Plastics, MirPack TM, Plasta.It, Primax D.o.o. The key players are
Enema Bag Market Development Strategy 2017
SUMMARY: Market Research Future published new report, titled “Enema Bag - Market Research Report: Global Forecast to 2027”. Market Synopsis for Global Enema Bag Market: Market Scenario: Enema bags are rubber bags which are utilized for the preserve enema. Basically these enema bags are utilized to administer enema. The global market for Enema Bag is expected to reach US$ XX by the end of the forecasted period and is expected to grow at a
Global Luxury Bag Market Research Report 2017
Qyresearchreports include new market research report "Global Luxury Bag Market Research Report 2017" to its huge collection of research reports. The market intelligence report provides an in-depth analysis of the global Luxury Bag market. The stakeholders for this report include market players involved in development, manufacturing, commercialization, and distribution and new companies planning to enter the global market for Luxury Bag. The executive summary of the report offers a snapshot of