Post-contractual non-compete clauses between companies and managing directors need to be balanced in order to be effective.

Post-contractual non-compete clauses are designed to protect the interests of the company after the managing director leaves. For this reason, the parties typically agree that the managing director shall not perform work for a competing company for a certain period following his departure. In return, the managing director receives compensation for observing the period of non-competition. Our experience at MTR Rechtsanwälte shows that this kind of prohibition on competition needs to be balanced and that the managing director’s freedom to choose an occupation must not be unduly restricted. Otherwise, the entire agreement may be void.

This is clear from an indicative court order of the OLG München (Az.: 7 U 2107/18). In the case in question, the prohibition on competition included a clause preventing the managing director from performing any activity for a competitor for a period of one year. The Court took the view that this went too far, since it prohibited the managing director from working for a competitor even, e.g., as a caretaker. It found that the entire prohibition was null and void due the clause.

Lawyers with experience in the field of company law can offer advice.

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