A nachvertragliches Wettbewerbsverbot (post-contractual non-compete) bars the employee from competing with the employer for a set time after leaving. It is binding only if the employer pays compensation for the restraint (Karenzentschädigung) of at least half the last contractual pay (§ 74 HGB). It may last no more than two years, needs written form, and must protect a legitimate business interest.
A nachvertragliches Wettbewerbsverbot (post-contractual non-compete) bars the employee from competing with the former employer for a set time after the employment ends. It protects clients and know-how, but the employer must pay compensation for it.
At a glance
- Binding only with compensation (Karenzentschädigung) of at least 50 percent of the last pay for the duration of the restraint (§ 74 (2) HGB)
- Maximum two years; written form with a handed-over deed required (§§ 74, 74a HGB)
- Binding only in so far as it protects a legitimate business interest and is reasonably limited in place, time, and subject matter; an overbroad ban is non-binding to that extent (§ 74a HGB, Art. 12 Basic Law)
- Other earnings are set off where, together with the compensation, they exceed 110 percent of the last pay (§ 74c HGB)
FAQ
What happens without or with insufficient compensation?
Without a promised Karenzentschädigung the restraint is void and the employee is free. If it is too low, the employee may choose whether to comply.
How far may the ban go?
Only as far as it protects a legitimate business interest and does not unfairly impede the employee in place, time, and subject matter. A blanket ban on working in the whole industry is usually too broad and non-binding to that extent; narrow it to the actual competition and a defined region.
Can the employer release itself from the ban?
Yes, by written waiver. But the duty to pay compensation ends only one year after the waiver is declared (§ 75a HGB).
Last updated: August 2026
This article provides general information and is not a substitute for legal advice in individual cases.
