Parental leave allowance

If an employer pays an employee compensation based on a written post-contractual non-competition clause, this is what is known as a waiting period. As a result, the compensated employee is obliged to provide information to the former employee regarding any other income earning.

Definition / explanation

According to & 60 HGB (Commercial Code), every employee is prohibited from engaging in competitive or competitive activities during an existing employment relationship. Unless the employer has expressly permitted this.

This non-competition clause ends with the employment relationship and the employee is now entitled to compete with his former employer. In such a case, the employer can protect himself by agreeing a post-contractual non-competition clause within the meaning of §§ 74 ff. HGB.

According to § 110 GewO (trade regulations), this legal regulation is applicable to all employment relationships. The non-compete clause must be in writing and must be given to the employee.

Content requirements

The non-competition clause is tied to strict content-related requirements:

  • The agreement is valid for 2 years
  • Determination of the prohibition
  • Regulation of the parental leave allowance
  • Legitimate interest of the former employer

The post-contractual non-competition clause must not exceed two years. In addition, the present prohibition framework must at least be comprehensible.

Since the basic right to freedom of occupation is in some cases considerably impaired by the prohibition, the employer must have a legitimate interest in continuing the prohibition of competition. During the prohibition period, the employee receives compensation.

Parental leave amount

For each year of the ban, the employer must pay compensation that must amount to at least 50 percent of the employee's last contractual service. The following aspects must be taken into account:

  • a contractually agreed 13th month's salary
  • Profit sharing
  • monetary benefits such as the use of the company car for private purposes
  • non-tariff allowances

The parental leave amount is paid at the end of the month in previously determined installments. The post-contractual non-competition clause can be lifted in writing by the employer. This means that the compensation ends one year after the employer has received the waiver.

Summary

  • Parental leave allowance is financial compensation for the fact that the former employee abstains from competition
  • The non-compete clause must be in writing and must be given to the employee
  • Compensation for parental leave is linked to the requirements of the content
  • The parental leave amount must correspond to at least 50% of the last contractual benefit
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