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Non-solicitation Agreement in Germany – Understanding the Basics

A non-solicitation agreement is a contractual agreement between an employer and an employee where the employee agrees not to solicit, approach or entice the employer’s clients, customers, or employees for a certain period of time, usually after the employee leaves the company. This agreement is used to protect the employer’s business interests and confidential information.

In Germany, a non-solicitation agreement is known as a “wettbewerbsverbot” or “competition ban.” This legal provision is part of the German Protection against Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb or UWG), which aims to prevent anti-competitive practices and to protect businesses from unlawful competition.

The Competition Ban in Germany

In Germany, competition bans are enforceable only if they meet certain criteria. Firstly, the competition ban must be in writing and signed by both parties before or at the beginning of the employment relationship. Secondly, the agreement must not be overly restrictive, meaning it should not unduly restrict the employee’s ability to earn a living. Thirdly, the duration and scope of the competition ban must be reasonable and proportionate to the employer’s legitimate interests.

Legitimate Interests of the Employer

The employer’s legitimate interests depend on the specific circumstances of the employment relationship. However, in general, the employer’s legitimate interests may include:

1. Confidential business information and trade secrets: Employers have a legitimate interest in protecting confidential business information and trade secrets from being used by competitors.

2. Customer and client relationships: Employers may have a legitimate interest in protecting customer and client relationships developed by employees during their employment.

3. Recruitment of other employees: Employers may have a legitimate interest in preventing the solicitation of other employees to join a competitor.

Duration and Scope of the Competition Ban

The duration and scope of the competition ban must be reasonable and proportionate to the employer’s legitimate interests. In general, a competition ban in Germany can last up to two years, depending on the industry and the specific circumstances of the employment relationship. The scope of the competition ban should be limited to the specific business activities that the employee was involved in during their employment.

Consequences of Breaching a Competition Ban

If an employee breaches a competition ban, the employer may be entitled to claim damages and seek injunctive relief. However, the employer must prove that the breach caused an actual loss or damage to their business.

In conclusion, a competition ban or non-solicitation agreement in Germany is legal and enforceable if it meets certain criteria. Employers must ensure that the agreement is reasonable and proportionate to their legitimate interests, and employees must carefully consider the consequences of signing such an agreement before committing to it.