A Post-Contractual Non-Compete Clause That Does Not Provide For The Statutory Non-Compete Compensation Is Void, Even If It Contains A Severability Clause

Under German statutory law, a post-contractual non-compete clause is enforceable only if it provides for adequate compensation. Such compensation must be at least 50 percent of the employee's total remuneration.

Non-compete clauses in the United Kingdom or United States do not typically provide for compensation.

In Germany, once validly agreed (with at least 50 percent compensation provided for), the employer cannot simply waive the post-contractual non-compete obligation with immediate effect. Instead, the employer is released from the duty to pay the agreed compensation only after one year following the written waiver.

In this case decided by the Federal Labor Court, the plaintiff had a post-contractual non-compete clause in her contract which did not provide for any compensation. It did, however, contain a severability clause according to which any unenforceable contractual provision should be deemed replaced by a valid and enforceable one.