HR-Glossar

Nachvertragliches Wettbewerbsverbot (post-contractual non-compete)

When a German non-compete binds, why nothing applies without compensation and what to watch when waiving it.

1. What is Nachvertragliches Wettbewerbsverbot (post-contractual non-compete)?

A post-contractual non-compete restricts professional activity after the employment relationship ends. It is governed by Sections 74 ff. HGB – and those provisions apply, through Section 110 GewO, to all employees, not only to commercial staff. That is regularly overlooked because they sit in the Commercial Code.

The load-bearing rule is simple and consequential: a non-compete is binding only where the employer promises compensation for the duration of the restriction amounting to at least half of the contractual remuneration last received (Section 74(2) HGB). Where the promise is missing altogether, the restriction is void – nobody has to observe it.

Where compensation is promised but too low, something particular happens: the restriction is then non-binding. The employee has the choice – they can observe it and claim the promised compensation, or ignore it and receive nothing. That choice belongs to them, not to the employer.

For a group importing a standard non-compete from another jurisdiction, the second paragraph is decisive. A clause with no compensation is not a weak restriction here; it is no restriction at all.

2. Origin and development

A non-compete after the contract ends strikes at the core of occupational freedom: it prevents someone doing what they trained for. The legislature did not resolve that conflict by a prohibition but by a price: whoever wants to restrict another person's professional activity has to pay for it.

The entire structure follows from that. The compensation is not an ancillary duty but a condition of validity. The maximum duration of two years (Section 74a(1) HGB) limits the restriction in time. And Section 74a(1) HGB requires a legitimate business interest – a restriction merely intended to make a move to a competitor harder, where no protectable knowledge or client relationships are affected, is non-binding to that extent.

The rule with the greatest practical consequence concerns waiver: Section 75a HGB allows the employer to waive the restriction before the contract ends – but it is released from the duty to compensate only one year after that declaration. A waiver shortly before departure therefore still costs a year of payments.

3. Core principles and how it works

Written form and handing over the document

The restriction requires written form, and the employee must receive a document signed by the employer. Where it is not handed over, they can rely on it being non-binding.

Void without a promise of compensation

Where a promise of compensation is missing entirely, the restriction is void – without consequence for either side.

Too little compensation makes it non-binding

Where the promise falls below the statutory minimum, the employee may choose: observe it and claim the promised compensation, or not observe it and receive nothing. The choice is theirs, not the employer's.

A legitimate business interest

Section 74a(1) HGB requires one. A restriction going beyond it – in territory, time or subject matter – is non-binding to that extent.

A maximum of two years

A longer restriction is non-binding for the excess period.

Set-off of other earnings

What the employee earns elsewhere during the restricted period is set off against the compensation under the statutory conditions. They are obliged to provide information.

A waiver takes effect only after a year

Under Section 75a HGB the employer can waive before the ending; the duty to compensate ends only one year after the declaration. A late waiver saves nothing.

4. Who is Nachvertragliches Wettbewerbsverbot (post-contractual non-compete) relevant for?

- Employees with client or knowledge access – sales, development, consulting, management. - Employers with protectable know-how – for them it is the only instrument reaching beyond the end of the contract. - HR departments – they draft the clauses and decide on waivers. - Payroll teams – the compensation is subject to tax and contributions and is processed across the restricted period. - Employees facing a move – for them the clause decides their mobility in the market.

5. How it differs from related terms

- Post-contractual and contractual non-compete – during the employment relationship a non-compete exists anyway as an ancillary duty, without compensation. Sections 74 ff. HGB concern only the time afterwards. - Non-compete and confidentiality – confidentiality about trade secrets continues without compensation. But it prohibits only the use of secrets, not the activity itself. - Non-compete and non-solicitation – a prohibition on soliciting clients or staff is narrower and is assessed differently in part. - Compensation and severance – the compensation is payment for refraining, severance a compensation for losing the job. Both can exist side by side. - Non-compete and a managing director's service contract – Sections 74 ff. HGB do not apply directly to corporate officers; different standards are applied there.

6. Variants and adaptations

Arrangements and their effect:

- A comprehensive ban on any activity – the most vulnerable, because it regularly exceeds the legitimate interest. - A restriction limited by subject matter – confined to particular products, markets or client groups; considerably more sustainable. - A client protection clause – prohibits only servicing particular clients. It is milder and more likely to be upheld, but is subject to the same rules including the duty to compensate. - A conditional non-compete – intended to be triggered only if needed. Such constructions are risky: a restriction whose application is at the employer's discretion is regularly non-binding. - Waiver – under Section 75a HGB, but with the payment obligation running on for a year.

7. Advantages and challenges

Advantages

  • Protects client relationships and know-how beyond the end of the contract
  • The structure is old, settled and easy to predict
  • For employees it means a paid transition period
  • A restriction limited by subject matter is sustainable and proportionate
  • The waiver under Section 75a HGB gives the employer a way out

Challenges

  • The compensation is expensive and falls due regardless of whether the protection is needed
  • Without a promise of compensation the restriction is void — the effort was wasted
  • Where the promise is too low, the employee chooses, not the employer
  • Overbroad clauses are non-binding to that extent
  • A waiver takes effect only after a year — a late waiver saves nothing
  • For employees it can practically rule out a move within their own field

8. Best practices for implementation

Draft narrowly rather than widely

Align subject matter, territory and duration with the actual need for protection. A wide clause is not safer but non-binding to that extent – and the employer still pays.

Decide on a waiver at departure, not afterwards

The one-year run-on makes a late waiver worthless. The decision belongs in the separation process, at the latest in the termination agreement.

Deal with it expressly in a termination agreement

Whether the non-compete continues or is lifted belongs expressly in the agreement. A general settlement clause does not reliably capture it.

Calculate and process the compensation correctly

The yardstick is the contractual remuneration last received, including variable elements. The payment is processed on a running basis across the restricted period.

Require information about other earnings

Without information the set-off cannot be made. The right to it belongs in the clause.

9. Tips for employers and employees

For employers

  • **Without a promise of compensation it is void** – Section 74(2) HGB
  • **Draft narrowly** – an overbroad clause is non-binding to that extent, the payment remains
  • **Declare a waiver in good time** – Section 75a HGB, the duty ends only a year later
  • **Deal with it expressly in a termination agreement** – settlement clauses do not reliably capture it

For employees

  • **Without compensation you are not bound** – the restriction is then void
  • **Where the promise is too low you have the choice** – observe it and be paid, or ignore it
  • **At least half of your last remuneration** – Section 74(2) HGB, including variable elements
  • **Disclose other earnings** – they are set off under the statutory conditions

10. Conclusion

A post-contractual non-compete has a price, and it is fixed by statute: at least half of the contractual remuneration last received, for the duration of the restriction. Where that promise is missing, the restriction is void. Where it is too low, the restriction is non-binding – and then the employee chooses, not the employer.

A classification that is often missing: Sections 74 ff. HGB apply through Section 110 GewO to all employees, not only to commercial staff. Their location in the Commercial Code regularly leads to the wrong assumption that they concern only commercial employees.

Two errors cost the most in practice. The first is the overbroad clause: it is not safer but non-binding to that extent – and the compensation is owed all the same. The second is the late waiver: under Section 75a HGB the payment obligation ends only a year after the declaration. Waiving at departure still means paying for another year.

For an international group the first sentence is the one that changes the template. A non-compete carried over from a jurisdiction where no consideration is required produces nothing here except, at best, an obligation to pay. Deciding whether the restriction is worth half a year's pay or more is a commercial decision that belongs taken before the clause goes into the contract, not when someone resigns.

A note on sources: the Commercial Code has an official English version, cited below. The Industrial Code does not (checked on 2026-09-27); its German text governs.

Sources

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