Competition and Enticement
Disputes over non-competition clauses
Disputes over non-competition clauses are usually complex cases. In addition to the provisions of the employment contract (as an expat in Germany, managerial employee, executive, director, officer or board member) there is further statutory German Law that can play a crucial role: Take on the one hand the German Commercial Code (Handelsgesetzbuch – HGB), the German Limited Liability Companies Act (GmbH-Gesetz – GmbHG), the German Stock Corporation Act (Aktiengesetz – AktG), the German Cooperative Act (Genossenschaftsgesetz – GenG). On the other hand there is statutory law against Unfair Competition (UWG) that can also affect the dispute.
Contractual non-competition clauses
In general, two types of disputes over non-competition clauses can be distinguished under German Employment Law: Those that relate to an ongoing employment and those that arise after an employment contract has ended. In the former case the dispute will frequently also cover the question whether the competition related violation may be a valid cause for a termination of the employment contract. The employing business will usually demand cease and desist and will further claim damages for the violation. Further, the business may also claim to take over the competitive contract in its own name.
Post-contractual non-competition clauses
The latter case refers to post-contractual non-competition clauses, on which it is often agreed on in a separate agreement concluded together with the employment contract. The crucial aspect with such non-competition agreements is their effectiveness: Where there is no waiting allowance of at least 50 % of the last remuneration for up to two years, the agreement is not binding for the employee. In addition, there are several other compulsory conditions for the effectiveness of a non-competition agreement under German Employment Law. Surprisingly, one or more of them are often not adhered to in the treaty practice and thus can provide a reason to take action against the agreement. In many cases, this leaves the employee with the free option, to either keep the agreement (and earn the allowance) or to cancel the agreement and enter into competition with his former employer.
Enticement of customers and remedies
Where the employee either wants to earn the allowance or wants freedom from the competition restriction, the perspective of the employer is under German Law as follows: He does not want to (permanently) loose his former customers. Further, he wants to eliminate the new competitors or at least impede their market presence as hard as possible. An often trodden path, therefore, is to use all measures of German Employment and Competition Law within reach combined: This means action on the basis of the contractual agreement in connection with the HGB, GmbHG, AktG or eG – directed to cease and desist orders and damages. Simultaneously, the violation can be warned and then pursued with interim relief and, later, in the main proceedings on the basis of competition law (UWG). Calculatio behind such an approach is that – even if the measures taken are not entirely successful – the new competitor will be very “busy” with the defense and has to face substantial financial risks. This will often reduce the actual competitiveness of the new competitor significantly.
Employment Lawyer in Germany
Our Employment Lawyers will take care of your German Employment Law affaires. They are experienced in enforcing a non-compete agreement for your business or defending you against cease and desist claims and damage claims from opponent parties. At the overlaps of German Employment Law and Corporate Law, Attorney Dr. Christian Zeller will provide you with vigilant and persistent courtroom representation – before all Employment Courts throughout Germany.
You can reach ZELLER & SEYFERT 24 hours a day, 7 days a week by phone (+49 (0) 69-58 80 972-40), email (email@example.com) or contact form. Alternatively you may enter our firm’s 24/7 access in order to book a free initial consultancy with one of our German Employment Lawyers. If you prefer to leave a call-back request (within 24 hours) or start a live chat you may also do so. Please get in touch with us. Google
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