A friend of mine accepted a position in a local consulting company about two years ago, and things have gone well for him until recently

He has just had his annual review, and they like his work, but his Swiss boss has told him, in so many words, that since he's Chinese, he should clearly not expect to go very far.. (i know, WTF )

he is good at what he does, so naturally wants to move on from this bigoted bunch. trouble is, he has only just noticed that among the clauses he agreed to when he first signed on, there is this gem that is called a 'no-compete' clause in the English world. if he leaves, he cannot work for another employer in the same industry for the following 12 months. in all of Switzerland !

he has asked, and his employer has no intention of letting him go. (the clause does not apply if they let him go). they have also suggested that he will not receive a nice reference if he leaves

i know he should have looked before he signed, but its too late for that now ...

a) would anyone know how the law would look on this? it is clearly unfair to forbid someone to practise the only trade he knows, for 12 months, in the entire country !

b) i know he can hire a lawyer, but are there other bodies he can approach for help? i hear about the arbeitslosen and the RAV.. should he be calling them first?

he is not looking to sue the employer, nor does he want unemployment (he has other offers). he just wants to leave in peace, get his reference, and be allowed to take another job, without fear that his ex employer will sue him for breach of contract

I had the same thing at the past two companies I worked for in England, and the company I worked for here - in fact one of them I think the clause was 2 years, not 12 months. I'm pretty sure this is a very common thing in work contracts.

I started in Switzerland working for a Danish software house they had the same clause backed by extra compensation in the salary. Several people left and were sued by said company and the company lost each time.

From memory the clause was too wide and breached both Swiss and EU law.


It might be worth checking the contract with a lawyer but in my experience these clauses are not worth the paper there written on.

ash

For a clause like this to be legal it has to be reasonable both in terms of geographic, market specific scope and duration. There is no black or white in terms of what is reasonable and no standard yes or no answer. If he is in a elite specialist in his field then it is more likely to be upheld than if he is Joe Bloggs. In determining his risk factor he needs to look at his expertise - is it reasonably easily replaceable? Has he acquired detailed specialist confidential knowledge which needs protecting for a period of time? Does he get paid a premium for who he is and / or what he does? If the answer to these is no then his risk is much less.

Sorry there is no yes or no answer to this......

A

The company I worked for in the UK took this clause out of the contracts because the new legal team at the time said they are just too open to interpretation. Someone can go and work for a "similar" company doing a "similar" job and a court would rule that he wouldn't be in direct competition, or pick whatever hole in it, and the company would lose.

They replaced it with a confidentiality clause which the legal beagles seemed to like better.

In the end, non-compete seems to be too much hassle to pursue. All the same, I'd get your friend to check it out with someone versed in that kind of law in Switzerland 'cos you never know...

Pretty much a Joe Bloggs... the company sells HR services and advice to Swiss companies (yeah, I know, the irony !)

they could make the case that he can potentially poach clients and client relationships, and it would be reasonable to forbid him from approaching those clients, but to forbid him from working in the field ..???? that amounts to denying him a livelihood, doesn't it ??

I agree with your sentiment, most non competes I know forbid you from going after clients and hiring people from the company etc. Not clear what the law is here though.

I do question, what exactly does he have to lose from breaking the non-compete? Problem with most non -competes from a company standpoint is they are very expensive to pursue legally, thus most companies (outside of CH) don't bother unless there is a significant expectation of loss. Once again, I don't know the practice in Switzerland.

he should resign and state he is going to a competitor and suggest they compensate him for taking no customers.

I know someone going from CS to JP Morgan who did this and lawyers were involved - and he's at JP now...

All the advice so far is sound.

Unless there is a punitive clause (ie he must pay 50000chf for simply going to a competitor) his employer must actually suffer a demonstrable loss to sue him. And it is going to be highly unlikely to be worth them trying unless there are large sums at stake.

He should also take care not to fall foul of any confidentiality clauses, about business knowledge etc.

He could also consider raising it with the prospective employer and getting some contractual protection in case he is attacked, but that would only be if they were really keen to have him specifically, so to be done with care.

D

... but did your close friend get the compensation?

That's pretty ballsy, and I hope doesnt backfire in the long term. Switzerland tends to be quite a small place.

D

When I asked a Swiss lawyer who set up my GMBH he said that the clause was illegal under Swiss law this was in 1997. Uk law is different.

ash

I think Andie1's response is a bit more on the mark. They are not per se illegal, just ineffective to enforce if they are too draconian.

In quite a lot of EU countries the clause, for it to be effective, has to specify that c.50% or more of salary continue to be paid during the period to "buy" the non compete in order.

We had one situation where I did manager to get an injunction against a senior employee in Germany to stop him competing, but only during his notice period on garden leave (he was trying to set up a competing company while we still paying him!)

Daniel

This SWISS lawyer stated that the clause was per se illegal under Swiss law , not difficult to enforce but impossible to enforce, afterwards on 2 occasions a Swiss court agreed.


This was a specific clause in a specific contract hence the advice would be to consult a lawyer familiar with those aspects of the law and check whether the clause in the contract in question is enforceable.

ash

Wasn't that guy a bit of a twunt though?

I'm not sure I get your post. I agree 100% the OP's friend should get specific advice... because I disagree with your post that non compete clauses are "illegal" in Switzerland: its gross over-simplification. You are now saying "impossible to enforce", but thats not synonymous with illegal.

If we are going to play SWISS lawyers at high noon I can send you wording by TOP SWISS lawyers drafted to modify to make even more effective some non-compete clauses my colleagues and I are subject to and I can assure you our own equally emeritus advisors didnt say "Oh dont worry those clauses are illegal in Switzerland.. ignore them."

Daniel

We had a similar discussion about this not long ago:

[Work contract] Termination clause prevents working for competitor - normal?

Even at risk of repeating myself:
To be valid, a non competitor clause should state clearly what are the companies you cannot work for, which positions you can not accept, on which countries.... Some of them are just too vague to be applicable. More importantly, a former employer cannot deprive you to the right of working and earn your money....it just cannot cut you out from an industry or from a specific job.


Whether it is valid or not, or applicable even depends on the way it is written and the conditions it states. I would recommend your friend to have it checked by a lawyer before anything else.

Hope this have helped,

Lucy

...as noted, Switzerland is a small place, or the world in some professions for that matter, so clarity before making moves and a bit of diplomacy are wise, especially if the OP wants to keep further options open. Companies will be hesitant to hire you if they think you might do the same to them that you did to the last employer, or, alternatively, milk you for what you bring from the last company then marginalize or drop you once you have been squeezed dry.

I never posted that non competition clauses are illegal in Switzerland I posted that the clause in question was thought to be illegal by a lawyer and this was subsequently confirmed by the Swiss courts.

The devils in the detail

ash

We were posting at cross purposes then. D

Sounds like your friend is in a tough position.
From my understanding, the details should be clear to when and where he cannot work for competition. Read, or have someone who knows the rules read, the document he signed and it should be clear to where he can work. More than likely out of Switzerland.
I believe penalties can be placed but as long as certain "clients" are not carried away from the original organization, problems should be minimalized and he may be able to make an arrangement otherwise.
Worst case, ensure the job title he takes does not carry the old title his is avoiding even if he works in a similar field.
I know one case that such a person broke this contract and was taken out of the country so be careful if he does not have the proper permits or visas.
Also, tell him if he feels bullied because of his race, he can certainly cause problems for the employer, legally he has rights, but know he may also end up in deeper than he can cope with if he is not familiar with the Swiss laws and can not fund a good lawyer.
Good luck for him