Compensation For Non Compete Agreement Template for Germany

The Compensation For Non Compete Agreement is a crucial document used in German employment relationships to protect legitimate business interests while ensuring fair treatment of employees post-employment. It is typically implemented for employees with access to sensitive business information, key client relationships, or specialized knowledge. The agreement must comply with strict German legal requirements, particularly regarding mandatory compensation (minimum 50% of previous remuneration) and maximum duration (2 years). This document type is essential when an employer needs to prevent competitive activities but must balance this with fair compensation and reasonable restrictions under German law. It's particularly relevant for senior positions, technical roles, and client-facing positions where post-employment competition could significantly impact the business.

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

2. Background: Brief context of the employment relationship and reason for the non-compete agreement

3. Definitions: Key terms used in the agreement, including 'Competitive Activity', 'Restricted Period', 'Restricted Territory', and 'Compensation'

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

5. Duration of Restriction: Specification of the non-compete period (maximum 2 years under German law)

6. Geographic Scope: Definition of the territorial scope where the non-compete obligations apply

7. Compensation: Detailed provisions for the mandatory compensation (minimum 50% of previous remuneration) and payment terms

8. Reduction of Compensation: Provisions regarding reduction of compensation due to other earnings during the restricted period (§74c HGB)

9. Confidentiality Obligations: Provisions regarding ongoing confidentiality requirements

10. Breach and Remedies: Consequences of breach, including potential contractual penalties (if applicable)

11. Governing Law: Explicit statement of German law application and jurisdiction

12. Severability: Standard clause ensuring survival of remaining provisions if parts are found invalid