I will be starting a new job in November. My new employer has subsequently noted a 2-year non-competition agreement in my employment contract. Now I would like to know without mentioning any further details - whether and when a non-competition agreement is possible.
Due to the lack of detail, I would like to outline the general requirements for the validity of a non-competition agreement (Art. 340 para. 1 CO)
1) The committing employees must be capable of acting.
2) The non-competition agreement is only valid in writing and must therefore contain at least the signature of the committing person.
3) The non-competition agreement is only effec-tive if the employment relationship has allowed the employee to gain information about the clientele or business confidentiality (Art. 340 para. 2 CO).
4) A condition for the validity of the non-competition agreement is that the use of this knowledge gained through the insight into the clientele or business confidences could sig-nificantly harm the employer (Art. 340 para. 2 CO).
5) The non-competition agreement must not unreasonably burden the economic advance-ment of the employee.
6) The non-competition agreement must not have lapsed due to the loss of material interest or as a result of the circumstances of the dismissal.
If one or more of these requirements are not met, the non-competition agreement is either invalid (points 1 to 4), partially invalid (point 5) or null and void (point 6). The required causal connection between the insight into the clientele or into business confidences on the one hand and the considerable damage to the employer through the use of this knowledge on the other hand requires special discussion. If the possible damage to the employee is not due to the insight into the business relationships, but predominantly to the personal abilities and characteristics of the employee, then there is no valid non-competition agreement.
In this context, I would like to ask a second question. What would happen if the non-competition agreement is not respected?
As with any breach of contract, the first consequence of a breach of the non-competition agreement is that the employee must compensate the employer for the resulting damage (Art. 340b para. 1 CO). As it is often very difficult for the employer to prove damages and a cause of action, non-competition agreements are usually secured by means of a contractual penalty.
Excessive contractual penalties may be reduced by court, whereby the court may take into account in particular the potential damage to the employer and the breach of good faith of the employee's behaviour (Art. 163 para. 3 CO). Unless otherwise agreed, the employees may release themselves from the non-competition agreement by paying the contractual penalty, although they remain liable to pay compensation for any further damages.
In contrast to other contract law, the elimination of the breach of the agreement can only be demanded if this has been agreed in writing (Art. 340b para. 3 CO). In addition, the injured or threatened interests of the employees and the behaviour of the employees must justify this actual enforcement of the non-competition agreement. The judge will weigh up the interests between the potential damage to the employer, the impact of a work ban on the employee and the extent of the employee's disloyalty, which is manifested in the breach of the non-competition agreement. As court proceedings and non-competition agreements usually last several years, effective proceedings only make sense if a precautionary measure can be taken at the start of the proceedings, as the duration of the non-competition agreement has often already expired by the end. As employees can suffer considerable damage as a result of a temporary work ban, which may subsequently turn out to be unjustified, the courts generally impose a deposit on the employer.
I work in the accounts payable department of a planning office. During our lunch break the other day, we were discussing the confidentiality of our company's accounts payable data. Now I'm wondering how far this confidentiality extends.
For a precise answer, I need more information, so I will take the liberty of giving you a general answer about confidentiality. Art. 321a para. 4 CO states that the information must be "facts to be kept in confidence", i.e. facts which the employer also wishes to keep confidential and which have not lost their confidential character due to the fact that they are already generally known in interested circles. The duty of confidentiality only lasts for the duration of the employment relationship. After termination of the employment relationship, the duty of confidentiality shall only continue to apply insofar as this is necessary to safeguard the legitimate interests of the employer in consideration of those of the employees.
