Post-employment non-compete clauses are commonly inserted into German employment contracts, particularly for sales, R&D, and senior roles — and they are commonly invalid. Knowing the rules can save you a year of waiting before starting a new role, or it can save you from agreeing to a clause that ties your hands without good reason.
The four cumulative conditions
Under §§ 74 ff. HGB (applied to employment contracts), a nachvertragliches Wettbewerbsverbot is only enforceable if all of the following are met:
- In writing. The clause must be in the signed written contract. An electronic version (DocuSign) generally satisfies the form for new contracts but verify the specifics.
- Duration ≤ 2 years. Anything beyond two years from the end of employment is void as to the excess.
- Limited in scope. The clause must specify the type of activity prohibited, the geographic area, and (often) the customer or product segment. A blanket “any work in any role with any competitor” is too broad and unenforceable.
- Compensation (Karenzentschädigung). The employer must pay at least 50% of your last regular gross remuneration (including bonus averages) for the entire duration of the non-compete. If the clause does not promise this — or the employer fails to pay — the clause loses its binding effect on you.
A clause that fails condition (1), (2), or (3) is null (void). A clause that fails condition (4) is “not binding” (unverbindlich), which gives you an option: you can choose either to comply and receive the compensation, or to ignore the clause without consequence.
What “competition” actually means
The clause typically prohibits work for a competitor or in a competing capacity. The scope is interpreted strictly — meaningful competition between your current and proposed employer must exist. A move from a B2B SaaS vendor to an unrelated consumer e-commerce business is usually not “competition” even if both are tech companies.
How the employer can waive the clause
The employer can release you from the non-compete in writing — at any time before the end of employment. This is common: by waiving, the employer avoids the obligation to pay 50% compensation for up to two years.
If you receive a written waiver during employment, the clause becomes ineffective from the date of termination (i.e. the employer’s compensation obligation also ends at the same time). After termination, the waiver effect kicks in only after 12 months and is therefore less useful for the employer; it is much cheaper to waive earlier.
What to do if you have a non-compete clause
- Have the clause reviewed. We can usually tell you within an hour whether it would bind you.
- If it binds you and you want to take a competitor role, we negotiate either a waiver or a buy-out.
- If it does not bind you (defective drafting), you can move freely — though we generally communicate this carefully to the new employer in writing.
- If it binds you and you accept it, claim the Karenzentschädigung from the first day after termination. Note the three-month exclusion-period deadline applies here too.
Calculating the Karenzentschädigung
The minimum is 50% of your last “regular” remuneration. “Regular” includes base salary, recurring bonuses (averaged over the last three years), recurring allowances, the cash value of benefits in kind (e.g. company car for private use). One-off payments (signing bonus, severance) generally do not count. The calculation can become contested — get it on paper before you sign or before the non-compete period starts.
How to test whether your move is “competition”
The clause typically prohibits work for a “competitor” or in a “competing capacity”. The legal test is whether your new employer’s business overlaps meaningfully with your old employer’s business in the same product/service segment, customer segment, or geographic market. A move between unrelated industries is usually safe even if both are tech, finance, or consulting. A move within the same niche is usually not. We can give a confident view on borderline cases within an hour of seeing both contracts.
What to do when the new offer arrives
Don’t reveal the non-compete to the new employer in early conversations — many recruiters underestimate German enforceability and will retract the offer. Get advice first, decide whether the clause binds you, then plan the disclosure (or release negotiation with the old employer) strategically.