Austria: Non-competition clauses – current fee limits

 

It is often in the interest of the employer to limit the employment of employees after the end of the employment relationship. So-called competition clauses are therefore widespread in employment contracts, whereby their effectiveness depends on the fulfillment of strict legal requirements.

First, it should be noted that not every type of termination will result in the application of a non-compete clause. If the employment relationship is terminated by the employer (with the exception of a cause for which the employee is culpable) or if the employer has given the employee cause for early resignation or termination through culpable conduct, the employer cannot invoke an agreed non-competition clause.

In addition, a non-competition clause is only effective insofar as:

• the employee is of legal age at the time the agreement is concluded,
• the restriction of the employee's activity in the employer's line of business is limited to a period of one year and
• the restriction of employment in relation to the business interests of the employer does not result in an unreasonable impediment to the employer's advancement - under no circumstances should the non-competition clause de facto amount to a professional ban.

Furthermore, a non-compete clause is only effective if the remuneration due for the last month of the employment relationship exceeds a certain amount. If an employment relationship ends in 2023, the following salary limits apply, depending on when the agreement was concluded:

• For contracts concluded before March 17, 2006, there is no minimum fee to be observed.
• For contracts concluded before December 29, 2015, the monthly fee must exceed EUR 3,315.00 upon termination - special payments must be taken into account proportionately.
• If an agreement was concluded after December 29, 2015, the monthly fee must exceed EUR 3,900.00 upon termination for the competition clause to apply - special payments are not to be taken into account here.

 

For further information, please contact:

Hanna Lemberger, Lawyer

Zumtobel + Kronberger, Salzburg

e:  office@eulaw.at

t:  +43 662 62 45 00

 

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