This Non-Compete in Severance Agreement is essential when terminating employment relationships in Germany where protecting business interests is crucial. It is particularly relevant for employees with access to sensitive information, key client relationships, or specialized knowledge. The document must strictly comply with German labor law requirements, especially Sections 74-75 of the German Commercial Code (HGB), which mandate minimum compensation of 50% of previous remuneration during the non-compete period. The agreement is typically used when terminating employment of senior staff, technical experts, or sales professionals where preventing immediate competition is crucial. It combines standard severance provisions with carefully crafted non-compete clauses, ensuring both parties' interests are protected while maintaining enforceability under German law. The document should be prepared with consideration of the specific industry context, the employee's role, and the legitimate business interests requiring protection.
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1. Parties: Identification of the employer and employee, including full legal names and addresses
2. Background: Context of the agreement, including reference to the termination of employment and general purpose of the agreement
3. Definitions: Key terms used throughout the agreement, including 'Competitive Activity', 'Restricted Territory', and 'Restricted Period'
4. Termination of Employment: Confirmation of employment termination date and general severance terms
5. Non-Compete Obligations: Detailed scope of competitive restrictions, including geographical limits, prohibited activities, and duration
6. Compensation for Non-Compete: Specific details of the compensation for the non-compete period (minimum 50% of last remuneration as per German law)
7. Payment Terms: Schedule and method of compensation payments
8. Exceptions and Permitted Activities: Activities explicitly allowed during the restricted period
9. Confidentiality Obligations: Ongoing duties regarding confidential information
10. Breach and Remedies: Consequences of breach and available remedies
11. Severability: Provisions ensuring remainder of agreement stays valid if any part is found unenforceable
12. Governing Law: Confirmation of German law application and jurisdiction
1. Garden Leave: Include when there is a period between notice and termination where employee remains employed but not working
2. Customer Non-Solicitation: Additional restrictions on approaching customers, if relevant to the employee's role
3. Employee Non-Solicitation: Additional restrictions on approaching employees, if relevant to the employee's position
4. Return of Company Property: Include if there are specific company materials or property to be returned
5. Cooperation Clause: Include if ongoing cooperation is needed for transition or pending matters
6. Reference Letter: Include if agreement includes terms about providing employment references
7. Tax Treatment: Include if special tax considerations apply to the severance or non-compete payments
8. Insurance Continuation: Include if any insurance benefits are continuing post-employment
1. Schedule 1 - Compensation Calculation: Detailed breakdown of non-compete compensation calculation
2. Schedule 2 - Restricted Territory: Detailed definition and/or map of geographical restrictions
3. Schedule 3 - Competitor List: If applicable, specific list of companies considered competitors
4. Schedule 4 - Severance Payment Schedule: Detailed payment schedule for severance and non-compete compensation
5. Appendix A - Acknowledgment Form: Form for employee to acknowledge receipt and understanding of obligations
6. Appendix B - Release of Claims: If applicable, general release of claims against the employer
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