In its ruling of 26 June 2025 (4A_5/2025), the Swiss Federal
Supreme Court confirmed its jurisprudence that if compensation for
a post-contractual non-compete has been agreed, such clause
constitutes a bilateral agreement which cannot be unilaterally
terminated by the employer, unless contractually agreed
otherwise.
In the case at hand, the Country Manager of an International
Corporation agreed to a two-year post-contractual non-compete
obligation. As compensation, the parties had settled on a payment
representing 50% of the employee's last base salary for the
duration of the post-contractual non-compete period. Following the
termination of the employment contract, the Country Manager sued
the employer for payment of the compensation. The employer argued
that no such compensation was owed, claiming he had unilaterally
waived the post-contractual non-compete obligation.
The Swiss Federal Supreme Court reaffirmed its previous case law
(cf. BGE 78 II 230), concluding that a compensated post-contractual
non-compete obligation constitutes a bilateral agreement, which
cannot be unilaterally terminated by the employer, unless expressly
provided for in the contract. The court emphasised the importance
of protecting the employee's legitimate expectation of
receiving the agreed compensation. With this ruling, the Swiss
Federal Supreme Court took a clear stance against the part of legal
doctrine which argues that employers may free themselves from the
obligation to pay compensation by waiving the post-contractual
non-compete obligation subject to a reasonable notice period.
Furthermore, the Swiss Federal Supreme Court clarified that the
compensation under a non-compete clause constitutes consideration
for the employee's contractual obligation to refrain from
competition. It held that, unlike in a claim for damages, such
compensation is generally owed irrespective of any actual
disadvantages suffered by the employee. Consequently, the employer
is not allowed to set off the compensation with alternative income
or unemployment benefits received by the employee during the
duration of the post-contractual non-compete obligation, unless
contractually agreed otherwise.
While post-contractual non-compete obligations under Swiss law do
not require a compensation payment in order to be valid, this
decision highlights the importance from an employer's
perspective of including the possibility of a waiver of the
post-contractual non-compete obligation (and a statement that in
case of a waiver, no further payment is owed after the respective
notice period) in case such compensation is agreed
nevertheless.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
