At a glance
- Non-compete clauses are invalid if annual remuneration is below EUR43,106 as of 1 January 2025.
- Training clauses require an annual salary of at least EUR43,106 and training costs of at least EUR4,140.96.
- Arbitration clauses are rare and only valid for employees earning at least EUR86,212 responsible for company management.
The Act of 3 July 1978 on Employment Contracts (Act) makes both non-competition clauses and training clauses subject to a remuneration threshold. This threshold is indexed on 1 January each year.
As of 1 January 2025, a non-compete clause will be invalid if an individual's gross annual remuneration at the time of termination of the employment contract is less than EUR43,106. The majority view is that this salary threshold should be calculated in the same way as compensation in lieu of notice, ie including all benefits to which the employee is entitled.
According to case law, only the former employee can claim that the remuneration threshold hasn't been met. A former employee may also decide not to allege that the non-competition clause is void, in particular where the employee prefers to comply with the restriction and claim payment of the non-competition indemnity.
For those on an annual salary of between EUR43,106 and EUR86,212, a non-compete clause is only possible for job roles defined by a collective agreement agreed at joint committee level. Only a few joint committees have signed collective agreements on non-compete clauses but those that have includes the joint committee for hotels and restaurants which allows non-compete clause for most employees in the sector at this salary range. Note that for the hospitality sector, the collective agreement stipulates that the non-compete clause can only apply within a 5km radius of the place of work.
For those on a gross annual salary of at least EUR86,212, a non-compete clause is possible, unless there's a collective bargaining agreement at joint committee level to the contrary.
For sales representatives, a non-compete clause is possible if their annual remuneration is at least EUR43,106.
Training clauses are also subject to the remuneration threshold of EUR43,106. If an employee's annual remuneration is below this threshold, a training clause is not possible.
Training clauses are also linked to a second wage threshold. A training clause is only possible if the cost of the training is at least twice the average minimum wage under Collective Agreement No. 43. This is currently EUR2,070.48. Therefore, a training clause is only possible for training costing at least EUR4,140.96.
The last type of clause subject to a remuneration threshold under the Act is an arbitration clause. In principle, an employee and an employer cannot validly agree in advance that any dispute will be settled by an arbitration tribunal rather than by a labour court. However, there is an exception where an arbitration clause is permissible, namely for employees with a gross annual salary of at least EUR86,212 who are responsible for the day-to-day management of the company or a department of the company. Given the cost of arbitration compared to the relatively low cost of litigation in the labour courts, it's very rare to sign an arbitration clause.
