Judgment of the Zurich Higher Court – No compensation if non-competition clause ceased to apply

The decision of the Zurich Higher Court of 7 February 2020 is based on an employment relationship in which the parties agreed on a post-contractual non-competition clause and a compensation for compliance with the non-competition clause (so-called “cooling-off” compensation). It is undisputed that the employer terminated the employment contract with the employee, which resulted in the non-competition clause becoming ineffective. It was disputed, however, whether the compensation for parental leave also lapsed when the non-competition clause was removed. This question is controversial in case law and in doctrine. One part of the doctrine is of the opinion that with the non-competition clause, the compensation is also omitted, while another part argues that the employer is responsible for the omission itself and therefore the compensation is to be paid if the employer decides to comply with the non-competition clause. The Zurich High Court concluded that the removal of the non-competition clause did not lead to any compensation being owed. If an employee is no longer bound by a non-competition clause due to a termination and still cannot find an employment of equal quality, the damage is due to the termination of the old employment relationship and not to the non-competition clause. In other words, the employer does not have to pay a compensation for the period of non-competition because the employer is not in any way impeded in its economic progress.

| Simon Fricker

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Simon Fricker
Attorney at Law Certified Specialist SBA Employment Law
[email protected]

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