Document background
The Compensation For Signing A Non Compete Agreement is a critical document used when an employer wishes to prevent an employee from engaging in competitive activities after their employment ends. Under German law, post-contractual non-compete agreements are only enforceable if adequate compensation is provided to the employee. This document establishes the terms of such compensation, which must be at least 50% of the employee's last contractual remuneration, as mandated by the German Commercial Code (HGB). It is typically used for employees in senior positions or those with access to sensitive information, trade secrets, or important client relationships. The agreement specifies the scope of restricted activities, geographical boundaries, duration (up to 2 years maximum), and payment schedule. It must balance the employer's legitimate business interests with the employee's constitutional right to freely choose their occupation under German law.
