In a recent decision (judgment of 28 January 2013, Az. 16 Sa 593/12), the Hessian Higher Labour Court (LAG) ruled that an employer may issue a summary dismissal if the employee has engaged in unauthorised competing activities. As a general rule, commercial employees are prohibited under the statutory non-compete obligation pursuant to § 60 HGB from carrying out competing activities (whether as an employee or on a self-employed basis) without the employer's consent. Note: there is no comparable statutory provision for other employees and trainees; however, this group is likewise subject to a non-compete obligation, which is based on the employee's general duty of loyalty. In the case at hand, an employee working as a pipe fitter at a company specialising in drain pipe rehabilitation had collected EUR 900 in cash from a customer of the employer (for an assignment following on from a previous order carried out for the employer) and kept the money. The court regarded this as a serious breach of contractual duties and prohibits employees from offering services and goods within the employer's market segment. According to the court, the summary dismissal issued by the employer is therefore valid and terminated the employment relationship upon receipt of the notice by the employee.
Frequently asked questions
Frequently asked questions
Is summary dismissal permissible in cases of unauthorized competing activity by an employee?
Yes. In its judgment of 28 January 2013 (Az. 16 Sa 593/12), the Hessisches Landesarbeitsgericht (Hesse Higher Labor Court) ruled that summary dismissal is justified if an employee engages in unauthorized competing activities. Such a breach of duty can terminate the employment relationship immediately upon receipt of the notice of dismissal.
What does Section 60 HGB regulate regarding the non-compete obligation for commercial employees?
Section 60 HGB prohibits commercial employees from engaging in competing activities without the employer's consent – whether on a self-employed or employed basis. The non-compete obligation applies during the existing employment relationship and protects the employer from competition by its own staff.
Does a non-compete obligation also apply to non-commercial employees and trainees?
Yes, even though no statutory provision comparable to § 60 HGB exists for this group. In these cases, the non-compete obligation derives from the employee's general duty of loyalty under the employment contract toward the employer.
What conduct qualifies as unauthorised competing activity under case law?
Unauthorised competing activity exists when an employee offers services or work in the employer's market area. In the case decided, a pipe fitter privately carried out a follow-up order at a customer of the employer and collected EUR 900 in cash – the court regarded this as a serious breach of duty.
What are the consequences of a valid termination without notice due to competing activities?
Upon receipt of the termination without notice by the employee, the employment relationship ends immediately, without observing any notice period. In addition, claims for damages and the employer's right of entry under § 61 HGB may apply.