Non-Compete Clause in employment contract

Visas, Permits, Passports and Naturalization
1
Hello All,

I am an Egyptian engineer. I have been offered a Swiss contract while I will be based in Germany for a telecom company. The company is responsible for the work permit and VISA issuance.

The contract duration is 3 years and could be extended up to a maximum of 5.

As I am married with 2 kids who will relocate with me, thereby I want to reduce the effect of the move by minimizing the risks.

As I am not EU citizen, therefore, a work permit is required whenever I change my employer. I do not want to break any rules or be non-ethical.

The problem is that I have a non-compete clause in the contract which I am afraid that once the 3 years are over the employer ban me from working in my career

I am looking for a legal advice.

The clause states the below

"In light of their duties and the strategic information of an economic, commercial or technical nature to which the employee has access, the employee undertakes, after termination of their employment contract or if the employee leaves the company and more generally the "X" Group, and for a term of 12 months, not to be involved, directly or indirectly and in any form whatsoever, in a company that competes with the "X" Group and that works directly or indirectly in the Telecommunications sector and not to establish their own business in this sector.

This clause applies to the territory of Egypt and to the zone of Europe for a term of 12 months in the event that the Employee leaves the group.

In consideration of this non-competition obligation, the employee will receive

As indemnity equal to 50% of the gross annual reference salary.

as the above indemnity is the counterpart for compliance with the non-competition clause, it ceases to be due in the event of a breach of the said clause, without prejudice to any damages that may be claimed from us.

In the event of a breach of this clause, the Employee undertakes to pay a contractual penalty equivalent to six months' gross reference salary. The right to take action for additional damages is reserved, along with the right to demand that an end be put to the breach.

X Group will however be able to release the employee from this non-competition obligation, and thereby not pay the indemnity provided in counterpart thereof, on condition that it informs the employee in writing.

Best regards,

2
Non-competition clausules should be fair and reasonable, yours sounds to me to restrictive, however I do not know your function nor the company.

Also they offer 50% of your yearly reference salary for these 12 months, if you are able to survive on this you can just enjoy a year of holiday in Germany, and after that you are free to work wherever you please.

3
That non-compete clause in not really enforceable if you were let go because your contract wasn't renewed. The only possible exception would be if they were paying your full salary during the 12-month non-compete period (making it effectively a year-long garden leave).

The purpose of the clause is primarily for the company to protect itself if you get poached by the competition because you know the technology and/or customers - in that case they can demand (some) compensation but your new employer would settle that.

4
I think it is enforceable as they are paying the OP 50% OF SALARY, throughout the non compete phase. It's not enforceable when companies don't pay anything.

5
50% salary for 100% of 'abstention' is not fair and reasonable, especially if the employee is being terminated (or contract not renewed).

Would the employee then have the right to go to RAV/Chomage and say 'please top-up to 80% of my previous salary and don't ask me to do anything in the next 12 months because I'm not allowed to take any job in my field'?

6
This part caught my eye. Is the company trying to get you a residence/work permit for Switzerland but you'll commute across the border? Or it's a Swiss company that's going to help you get a residence/work permit in Germany?

I don't think you can get a non-EU permit for Switzerland and be based in or commute to Germany.

If you do work in Germany as opposed to Switzerland, not sure how a non-compete clause works in that country. Laws could be different. Hopefully folks here know the rules for both countries.

7
To be paid 50% not to work for a year, it's not unreasonable, I wish I had such a contract when I worked. Yes they would be topped up.

8
Not sure about top-up if the OP is prohibited from looking for a job in his field. Or should he just pretend to be looking in order to satisfy RAV rules and then mention the non-compete clause in every interview?

9
OP you need to check with a lawyer.

50% of salary could be fair enough... it depends on the base. If they’re bringing you from Egypt, I have a suspicious feeling they’re trying to get you here on the cheap to rake high fees.

So depending on the fix salary, 50% could be ok, but even a 100% could be bad if you’re gonna get paid CHF60k for an engineering job at a telecoms company.

I’ll dig out the thread where we discussed similar practices to this not very long ago.

بالتوفيق

Edit: Similar thread below:

https://www.englishforum.ch/internat...itzerland.html

There are strict provisions for non-compete conditions in Switzerland. Yours sounds reasonable to me but I’m not an expert. Again it depends on if the 50% will be enough for you to sustain your family for 12 months or not.

10
To me there is to much unclear to be able to find it reasonable or not, we do not know the company nor how big it is so we do not know how many company's compete with them, we do not even know the function of OP, nor do we know how much his chances for labour depend on being employed in the telecom sector.

11
Depends how much the salary is. Going from 100K to 50K could well cause issues.

12
He is not prohibited from looking for a job in his field, he just can't accept it.RAV requires to look for & take ANY job, no need to be in your field.

13
The company HQ is in Switzerland, but i will work in germany.

The contract follows swiss law.

The will get a work german work permit and german VISA

Thanks for the clarification, the problem is that this 50% is of my reference salary which is my current salary in Egypt not my international salary

Thank you for the clarification

What do you mean my top up is prohibited?

What does RAV stands for?

Who is the enforcer of this clause (labour council, immigration or something else?

14
If you don't mind the possibility of the contract being terminated after 3 (or 5) years then just go for it - non-compete clause is of secondary concern.

If the company really doesn't want to keep you longer then you'd probably not posses significant knowledge of trade secrets and/or customer details so they're may use the option to not pay you anything extra at the end of the contract: "X Group will however be able to release the employee from this non-competition obligation, and thereby not pay the indemnity ".

If you do have extensive knowledge of the business, technology and customers then they'd be stupid not to offer you another position within the group.

A lot of people move jobs between competing companies and run into each other on trade fairs and on customer sites. Probably all of them have similar clauses in their contracts, yet I've never heard of anyone being sued for changing jobs.

15
Disregard this - it was a discussion about how Swiss unemployment insurance would look at the matter in case you needed to register. Not relevant since your workplace would be in Germany.

16
I'd happily not work for 50% pay forever. Sign me up!

17
The word assignment in the contract refers to a mission in which someone is transferred within the group or company from one country to another.

In case of non renewal of the assignment then the employee is transferred back to his/her home country office.

The 50% is of my current salary in Egypt within the group. which is nothing

As it is a limited assignment (international mobility) for 3 years and can be extended only 2 more years, therefore in case of non renewal of the assignment i will have either to go back to my position in Egypt which means that i will have to disturb my family life balance once again or resigning from the group and hence the non-compete clause could be activated which means that they can ask me to pay the penalty and could even reach to new employer and ask him/her to fire me. That is the risk which i am trying to mitigate and avoid if possible

18
Resigning itself does not make you have to pay the penalty.

19
So it's your current employer that's sending you to Germany on a temporary basis but will be giving you back your old job in Egypt when the foreign assignment is over. In that case they are right in protecting their investment into your relocation if you intend to remain in Germany (as you probably do) by finding another employer willing to keep you and your family there.

It mostly depends on what kind of German work permit you'd get and whether your current employer even needs to know where you'd gone in case you jump ship.

20
Yes, but the salary is 180'000 and you are sad and lonely and live by yourself and have no dependents. HTH.