Prohibition of competition with consequential effect



Essentially, a prohibition of competition ends upon the termination of a contract of employment. Prohibition of competition can however extend beyond the termination of contractual employment under a corresponding agreement (comp. Art. 340, Para. 1 of the ‘CoO’)


  • Written agreement on prohibition of competition;
  • Capacity to act on the part of an employee;
  • Insight of an employee into the circle of customers, or into the business- and manufacturing secrets of an employer;
  • Risk of loss or damage for an employer;
  • Restrictions on a prohibition of competition in regard to area, time period and subject matter.

Statutory consequences

An infringement of prohibition of competition by an employee will attract the following claims of an employer (Art. 340b of the ‘CoO’):

  • Claim for desistance but only by special agreement;
  • Contractual penalty, but only by special agreement;
  • Claim to indemnities, cumulatively to a claim for desistance or a contractual penalty.
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