Non-competition clause:

Security service wanted to rip off former employee

A recent case from Vorarlberg shows that what is written in employment contracts is not always legal. A security company wanted to claim a contractual penalty of 7300 euros from a former employee. Thanks to the Chamber of Labor, however, nothing came of it.

For years, Mr. N. had been supplementing the salary from his main job with a part-time job as a security guard. Some time ago, he left the security company he had worked for for a long time by mutual agreement. Shortly afterwards, he started working for another security company. So far, so unspectacular.

But then came the nasty surprise: his ex-company sued for payment of a contractual penalty agreed in his employment contract. The document contained a so-called non-competition clause, which prohibited the employee from working in the security industry again for six months. N. was ordered to pay a hefty 7300 euros for his alleged breach of contract. 

Before paying a contractual penalty, both the agreement on which it is based and the claim itself should always be legally checked.

Christian Maier, Arbeitsrechtsexperte der AK Vorarlberg

Mr. N. did the only sensible thing in this situation and turned to AK Vorarlberg with the court payment order issued against him. When examining the complaint, the labor law experts there quickly determined that the guard's monthly salary was far below the statutory threshold. "However, the last monthly salary must exceed this threshold, which is reset annually, for an agreed non-competition clause to be effective. The employer was therefore not entitled to payment of the contractual penalty," explains AK employment law expert Christian Maier.

Labor law expert Christian Maier from AK Vorarlberg.(Bild: Arbeiterkammer Vorarlberg)

Consequently, the chamber lodged an objection to the dunning action. The court then made short work of the employer: just five days after the half-hour hearing, the judgment was handed down and the employer's claim was dismissed. 

In general, you should take a close look at non-competition clauses, as there are always inconsistencies. "Before paying a contractual penalty, both the agreement on which it is based and the claim itself should always be legally checked," advises Maier.