Non Compete Contract for Germany

Non Compete Contract Template for Germany

A German law-governed non-compete agreement that restricts an employee's ability to work for competitors or start a competing business after employment termination. The agreement must comply with specific German legal requirements, including mandatory compensation of at least 50% of the employee's last contractual benefits and a maximum duration of two years. The document outlines the scope of restricted activities, geographical limitations, compensation details, and enforcement mechanisms, all while ensuring compliance with §§74-75f HGB (German Commercial Code) and related legislation.

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What is a Non Compete Contract?

This Non Compete Contract is essential for German employers seeking to protect their legitimate business interests from competition by former employees. It is particularly relevant when employees have access to sensitive information, trade secrets, or valuable customer relationships. The agreement must strictly comply with German law, which requires providing compensation of at least 50% of the employee's last contractual benefits during the restricted period (maximum 2 years). The document should be used selectively for key positions where protection of business interests justifies the significant cost of post-employment compensation. It includes detailed provisions on restricted activities, geographical scope, compensation calculation, and enforcement mechanisms, all aligned with §§74-75f HGB and related German legislation.

What sections should be included in a Non Compete Contract?

1. Parties: Identification of the employer and employee/contractor, including full legal names and addresses

2. Background: Context of the employment/business relationship and reason for the non-compete agreement

3. Definitions: Key terms including 'Competitive Activity', 'Restricted Territory', 'Restricted Period', and 'Confidential Information'

4. Scope of Non-Compete: Detailed description of prohibited competitive activities, aligned with §74a HGB requirements for reasonable restriction

5. Duration and Territory: Specification of the non-compete period (max 2 years under German law) and geographical scope

6. Compensation: Mandatory compensation details (minimum 50% of last contractual benefits) as required by §74 HGB

7. Employee Obligations: Specific duties during the restricted period, including reporting requirements and disclosure obligations

8. Employer Rights: Employer's rights regarding waiver of non-compete and monitoring compliance

9. Breach and Remedies: Consequences of breach, including contractual penalties (if applicable) and injunctive relief

10. General Provisions: Standard clauses including severability, governing law, and jurisdiction

What sections are optional to include in a Non Compete Contract?

1. Garden Leave: Used when the employer wishes to include provisions for paid leave during notice period

2. Customer Non-Solicitation: Additional restrictions on customer contact, when employee had significant customer relationships

3. Employee Non-Solicitation: Restrictions on hiring former colleagues, when employee had management responsibilities

4. Intellectual Property Protection: Additional IP provisions when employee had access to significant technical information

5. International Scope: Required when non-compete needs to cover multiple jurisdictions

6. Training Compensation: Included when employer provided specialized training requiring protection

7. Post-Term Cooperation: Provisions for assistance in transition or litigation after departure

What schedules should be included in a Non Compete Contract?

1. Schedule 1: Compensation Calculation: Detailed breakdown of compensation calculation and payment schedule

2. Schedule 2: Restricted Activities: Specific list of prohibited activities and competitors

3. Schedule 3: Restricted Territory: Detailed definition of geographical restrictions with specific regions/countries

4. Appendix A: Notification Form: Template for employee to report new employment opportunities during restricted period

5. Appendix B: Acknowledgment Form: Employee's acknowledgment of obligations and receipt of compensation details

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Relevant Industries

Technology

Professional Services

Financial Services

Manufacturing

Pharmaceuticals

Biotechnology

Consulting

Software Development

Research and Development

Healthcare

Telecommunications

Engineering

Sales and Distribution

Media and Entertainment

Relevant Teams

Executive Leadership

Research & Development

Sales

Product Development

Engineering

Customer Success

Business Development

Technical Operations

Professional Services

Marketing

Finance

Strategy

Human Resources

Legal

Relevant Roles

Chief Executive Officer

Chief Technology Officer

Sales Director

Senior Software Engineer

Research Scientist

Business Development Manager

Product Manager

Technical Lead

Senior Consultant

Account Executive

Regional Manager

Head of Research

Senior Financial Analyst

Operations Director

Chief Marketing Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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