The employee is not allowed to compete with his/her employer. He/she is also not allowed to commence competing activities during the employment relationship [Prohibition of Competition]. Competing activities usually means business activities undertaken by the employee. However, it is also forbidden to work in another company which competes with the employer’s business. During the term of employment, employees is also prohibited from preparatory actions for competing activities. According to case law, preparing a company without any real activity is not considered prohibited.
The employee has an obligation to act loyally towards his/her employer, i.e. he/she must avoid all such actions which conflict with the benefit of the employer. When considering whether or not it is possible to terminate the employee’s employment relationship on the basis of his/her competing activity, the determining factor is, that the employee’s activity must damage the benefit of the employer in an obvious way.
The employee may work in several employment relationships simultaneously. When taking a secondary occupation, the employee’s position must be taken into consideration. Employees who are laid off or working part time always have the right to undertake also other work. If the employer is aware of the employee’s activity when having hiring the employee, the activity is not considered to be competing.
If an employee is competing with the employer, he/she can be given notice. The employer must first give the employee a warning which states the prohibition of competing activity and the consequences thereof. If the employee violates the prohibition in a serious manner, the employer has the right to cancel the employment relationship.
The employee shall be liable for the damage that his/her competing activity has caused to the employer. Also an employer who hires an employee, knowing that the employee breaches his/her existing employment agreement and its competing prohibition by signing a new employment agreement, shall be liable for damage to the employer.