The Non-Compete Clause in Switzerland

Validity Conditions

Written Form (art. 340 para. 1 CO)

Only valid if agreed in writing with the employee's signature.

Access to Clients or Secrets (art. 340 para. 2 CO)

Valid only if employment gave the employee knowledge of clients or manufacturing/business secrets whose use could cause significant harm to the employer. ATF 138 III 67: a simple employee without access to strategic information cannot be bound.

Limits (art. 340a CO)

Must be reasonably limited in place, time and type of business. Maximum duration: typically three years. The court may reduce an excessive clause (art. 340a para. 2 CO).

Breach Sanctions

Contractual penalty (art. 340b para. 1 CO): payment does not release from the obligation (art. 340b para. 2 CO), unless agreed. Court may reduce excessive penalties (art. 163 para. 3 CO).

Cessation and damages (art. 340b para. 3 CO): the employer may seek injunctive relief and actual damages.

Extinction (art. 340c CO)

Employer-Initiated Termination Without Just Cause (art. 340c para. 2 CO)

If the employer terminates without the employee giving justified cause, the clause lapses. ATF 145 III 109: the clause survives if the employer had just cause (even without using immediate termination).

Loss of Employer Interest (art. 340c para. 1 CO)

If the employer no longer has a real interest in maintaining the prohibition.

Expiry of Duration

No Mandatory Compensation

Unlike German or French law, Swiss law does not require compensatory payment for the non-compete clause. The employee is bound without specific financial consideration. However, the court may consider this in reducing the clause's scope.