The Bundesgerichtshof In its judgment of April 23, 2024 (case number II ZR 99/22), the court decided an exciting case on the retroactive forfeiture of compensation in the event of a post-contractual non-competition clause of a GmbH managing director. According to this, the entitlement to compensation is retroactively forfeited if a GmbH managing director violates the post-contractual non-competition clause.
1. FACTS
The parties are still arguing about the payment of compensation in the defendant's counterclaim. The defendant was the managing director of the plaintiff GmbH and was subject to a two-year post-contractual non-competition clause in return for payment of compensation. In the employment contract, the parties also agreed that the compensation would be waived ex tunc (from the beginning) in the event that the defendant (managing director) violated the non-competition clause. In the event of a violation of the non-competition clause, the agreement also stipulated that the defendant would have to repay the compensation already paid to the plaintiff (former employer).
The plaintiff removed the defendant as managing director by resolution of the shareholders' meeting on May 31, 2012. At the same time, the plaintiff's shareholders objected to the continuation of the employment relationship with the defendant and declared his termination as a precautionary measure. The plaintiff did not make the monthly compensation payments due since May 31, 2012. From June 17, 2013, the defendant worked as managing director for a competing company within the meaning of the prohibition clause.
The Berlin Regional Court had dismissed the counterclaim in its entirety. Following the defendant's appeal, the Higher Regional Court partially upheld the counterclaim. It found that the defendant had violated the non-competition clause, but that the retroactive elimination of the compensation violated the prohibition of excessiveness. Following the plaintiff's appeal, the Federal Court of Justice reinstated the district court's judgment and dismissed the defendant's counterclaim in its entirety.
2. DECISION
According to the BGH, the claim to compensation for non-competition was retroactively lost due to the breach of the post-contractual non-competition clause. The non-competition clause in dispute is effective and is not subject to any content control according to Civil Code § 307The appeal court did not determine that the non-competition clause was a general business condition. According to the Federal Court of Justice, the retroactive cancellation of the compensation does not place an unfair burden on the defendant. According to the consistent case law of the Federal Court of Justice, there is no obligation to pay compensation to the managing director of a GmbH with whom a post-contractual non-competition clause is agreed. If compensation is promised, the parties can freely agree on its amount. Therefore, the retroactive cancellation of a promised compensation can also be effectively agreed in the event that the managing director violates the non-competition clause.
Even if, in the defendant's view, the compensation for the waiting period is designed as an income replacement benefit that cannot reasonably be taken retroactively, no other consideration arises. In the present case, such an understanding is contradicted by a contractual arrangement according to which the company is permitted to unilaterally waive the non-competition clause. In the view of the Federal Court of Justice, a reduction of the contractual provision to preserve its validity is inadmissible, according to which only the retroactive elimination of the compensation for the waiting period is ineffective, but the non-competition clause and the obligation to pay compensation for the waiting period would otherwise be effective. By means of a reduction to preserve its validity, only a non-competition clause that exceeds the time limit can be reduced to the time limit that is still to be approved.
In addition, according to the BGH, if the retroactive cancellation of the compensation for non-payment were invalid, Civil Code § 139 in case of doubt, the entire post-contractual non-competition clause is also invalid, since it has not been established that the parties would have agreed to the non-competition clause even without the forfeiture clause. The failure to make the monthly compensation payments does not mean that the plaintiff cannot, in good faith, invoke the retroactive loss of the compensation. The only other situation could apply if the plaintiff had "challenged" the defendant to start competing activities by seriously and definitively refusing to pay.
3. CONCLUSION
Despite numerous opposing voices in the literature, the BGH confirms its previous case law with this decision, according to which there is no obligation to provide for the payment of compensation when agreeing post-contractual non-competition clauses for GmbH managing directors. Consequently, it also makes sense to consider the retroactive forfeiture of a - voluntarily agreed - compensation in the event of a breach of the post-contractual non-competition clause to be effective. This leads to an expansion of the great scope for designing post-contractual non-competition clauses for managing directors. If companies regulate compensation for post-contractual non-competition clauses with their managing directors in the future, it is recommended to include a regulation on the retroactive forfeiture of compensation in the event of a breach of the post-contractual non-competition clause.
