{"id":3076,"date":"2017-04-18T14:15:56","date_gmt":"2017-04-18T12:15:56","guid":{"rendered":"https:\/\/www.startups.ch\/en\/blog\/?p=3076"},"modified":"2017-04-18T14:07:10","modified_gmt":"2017-04-18T12:07:10","slug":"contractual-penalty-case-infringing-non-competition-clause","status":"publish","type":"post","link":"https:\/\/blog.startups.ch\/en\/contractual-penalty-case-infringing-non-competition-clause\/","title":{"rendered":"Contractual Penalty in case of infringing the Non-Competition Clause"},"content":{"rendered":"

A non-competition clause is often included in an employment contract if an employee is of particular importance to the company. To ensure the employee\u2019s compliance with this clause it often also stipulates a contractual penalty. This penalty should, however, not be excessively high, as otherwise the court may reduce the amount.<\/h2>\n

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The contractual penalty as part of the non-competition clause <\/strong><\/p>\n

If a non-competition clause<\/u> is agreed in the employment contract<\/u> between employer and employee, a contractual penalty is also often agreed upon. This is put in place to encourage the employee to observe the non-competition clause. Should, however, the employee ignore this agreement they will have to pay a contractual penalty to their (former) employer. If this amount does not suffice to cover the damage incurred by the employer, the latter is entitled to sue the employee for the additional damage.<\/p>\n

The Amount of a Contractual Penalty <\/strong><\/p>\n

In principle the penalty can be fixed freely between the contractual partners. The law only states that the amount should not be excessively high. The upper limit is usually set at approximately three times the employee\u2019s monthly salary. In case of special circumstances the court may reduce the amount of the penalty. For instance, the Federal Court considers a short employment period or lacking evidence of the damage incurred from the employer\u2019s side reasons for such a reduction.<\/p>\n

Elimination of the Contractual Penalty <\/strong><\/p>\n

If the non-competition clause is eliminated, then the same shall also apply to the accompanying contractual penalty. The law has made provisions for three of such cases. The non-competition clause becomes invalid when the employer can no longer prove to have a significant interest in such a clause. The second of the reasons stated by the law entails the situation where the employer terminates the employee\u2019s employment without the latter having given the employer any justified reasons for doing so. Any behaviour of one of the parties may be considered a \u2018justified reason\u2019, when \u2013 objectively speaking \u2013 this behaviour makes it impossible for the other party to continue to fulfil the contract. In addition, the non-competition clause lapses when the employer terminates the employee\u2019s contract for justified reasons.<\/p>\n

\u00bb Legal forms<\/a><\/p>\n

\u00bb Foundation Platform<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A non-competition clause is often included in an employment contract if an employee is of particular importance to the company. To ensure the employee\u2019s compliance with this clause it often also stipulates a contractual penalty. This penalty should, however, not be excessively high, as otherwise the court may reduce the amount.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[3],"tags":[],"jetpack_publicize_connections":[],"aioseo_notices":[],"views":2408,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p54Pb1-NC","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts\/3076"}],"collection":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/comments?post=3076"}],"version-history":[{"count":4,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts\/3076\/revisions"}],"predecessor-version":[{"id":3080,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts\/3076\/revisions\/3080"}],"wp:attachment":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/media?parent=3076"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/categories?post=3076"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/tags?post=3076"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}