The most important facts in brief:
- A post-contractual non-competition clause must be agreed.
- The post-contractual non-competition clause may not restrict the managing director or board member in the further exercise of their profession. not unreasonably disadvantageous. Conversely, a legitimate interest of the company the post-contractual non-competition clause so that it can be effectively agreed.
- The required scope of the non-competition clause must be carefully determined by the company, as a non-competition clause that is too far-reaching in terms of content or territory is incurably null and void.
- The managing director is only entitled to a Compensation for waiting time, if such compensation has been agreed.
What is a post-contractual non-compete clause for managing directors and board members?
A Post-contractual non-competition clause in managing director or management board contracts prohibits managing directors and management board members from taking up a competitive activity yourself or working for a competitor. As legal representatives and heads of the company, managing directors and board members gain detailed knowledge of business secrets and customer relationships as part of their work. Moreover, they are often perceived as the face of the company to the outside world and are equated with it to a certain extent. A post-contractual non-competition clause is intended to ensure that company managers do not use the knowledge and customer relationships they have acquired to the detriment of the company immediately after their contract has ended.
When is a post-contractual non-competition clause of a managing director or board member effective?
A managing director or board member is subject to a post-contractual non-competition clause if it contractually agreed and a legitimate interest the non-competition clause exists.
The following conditions must be met for a post-contractual non-competition clause to be permissible:
- Contractual agreementA post-contractual non-competition clause must be expressly agreed. While managing directors and board members are subject to a non-competition clause during their employment even without an express agreement, a post-contractual non-competition clause only exists if it has been agreed.
- Overall assessmentA post-contractual non-competition clause is permissible for a managing director if it serves the legitimate interests of the company and does not unreasonably impede the managing director's professional practice due to the scope of the non-competition clause (place, time and object).
As with post-contractual non-competition clauses with employees, two factors in particular must be taken into account in the overall assessment:
- Legitimate interestThe company must have a legitimate business interest in the post-contractual non-competition clause.
- Scope of impairmentThe non-competition clause must not affect the managing director or board member too much. Otherwise, the non-competition clause would effectively lead to a professional ban. It is therefore important to carefully examine the scope and impact of the non-compete clause. The duration of the post-contractual non-compete clause, the activities covered and the local scope must be taken into account. For example, if a managing director of a veterinary clinic is prohibited from working within a radius of 100 km, such a non-compete clause is typically inadmissible.
- CompensationThe question of the effectiveness of the post-contractual non-competition clause is irrelevant to any compensation for non-competition. Managing directors and board members are not generally entitled to compensation for non-competition; a lack of compensation does not make the post-contractual non-competition clause inadmissible.
Sections 74 et seq. HGB, which regulate post-contractual non-competition clauses for employees, are not directly applicable to managing directors. The standard for determining whether a post-contractual non-competition clause of a managing director is permissible follows from Section 138 BGB in conjunction with Art. Art. 2, 12 GG. However, the requirements are very similar to those in Sections 74 et seq. HGB.
Additional requirements for general terms and conditions
Service contracts with managing directors and board members regularly constitute general terms and conditions (GTC) because they are used for a large number of cases.
In particular, this means that the following two standards are applicable:
- § Section 305c (2) BGBDoubts regarding the interpretation of the contract shall be borne by the company.
- § Section 307 (1) sentence 2 BGBThe contract must be clear and comprehensible; ambiguous clauses are invalid.
Is a managing director entitled to compensation?
A managing director or board member is only entitled to compensation during the non-competition period (known as compensation for non-competition) if such a Compensation contractually agreed has been made. As §§ 74 ff. HGB do not apply to post-contractual non-competition clauses with managing directors and board members, the compensation can also be lower than 50 % of the previous income. On the other hand, other income is not automatically taken into account.
Consequences of an ineffective post-contractual non-compete clause
If a post-contractual non-competition clause for a managing director or board member is not covered by a legitimate interest of the company, it is null and void. In contrast to a non-competition clause for employees, there are therefore No reduction in scope to the extent that is just permissible in terms of time, content or space. Only if clauses violate general terms and conditions regulations (e.g. Section 307 (1) sentence 2 BGB) is it possible that only individual clauses are invalid, but the rest of the non-competition clause remains valid.
Breach of post-contractual non-competition clause
If a managing director or board member breaches a post-contractual non-competition clause, these claims may be considered:
- Claim for injunctive reliefCompanies have a right to demand that the activity in breach of contract be discontinued.
- Claim for damagesIf the company has suffered demonstrable damage, it can demand compensation for the damage.
- Contractual penaltyIf a contractual penalty has been agreed, the company can demand it. The validity of a contractual penalty is subject to strict legal requirements.
Particularly in the case of the claim for injunctive relief, interim legal protection may be considered in order to ensure that the breach of the post-contractual non-competition clause is refrained from in a timely manner.
Waiver of post-contractual non-competition clause
The company may waive the post-contractual non-competition clause. The managing director or Management Board member is then released from the post-contractual non-competition clause with immediate effect. The company is then obliged to pay the non-competition compensation for a maximum of one year from the declaration of the waiver (but only from the end of the employment relationship). In contrast to post-contractual non-competition clauses with employees, the compensation period can be shortened.
The post-contractual non-competition clause is not the only way to protect the company from knowledge from the company being passed on to competitors via the managing director or board member. Companies have the following additional options to protect themselves:
- Confidentiality obligationsYou can oblige the managing director or board member to treat certain business secrets confidentially and to protect them. Such an agreement does not require any consideration. However, it can sometimes be difficult to effectively enforce confidentiality obligations.
- Longer notice periodsCompanies can agree long notice periods. During the term of the employment contract, the obligation arises from the duty of loyalty under the employment contract and, in the case of Management Board members, also from Section 88 AktG. The downside of this approach is that the managing director or board member remains in a key function for longer in the event of a separation and comes into contact with valuable confidential information or, in the event of a leave of absence, receives a high salary without working for it.