Legal | Tax | Compliance
Legal | Tax | Compliance
Legal framework
Public perception often associates sensitive terminations primarily with terminations with immediate effect under Articles 337 et seq. Swiss Code of Obligations (CO) or abusive terminations under Article 336 CO. These are the best known examples in practice. They also quite often lead to court proceedings.
Less well known to the public, but still common in practice, are cases that are no less sensitive. Consider the following example: an employee resigns. During the notice period, or afterwards, the employer learns that, despite an agreed non-compete undertaking, the employee is joining a competitor and has communicated his departure to the employer’s clients. It also turns out that the employee has downloaded various employer data to private devices or sent them to his private email address.
The scenario therefore involves three elements: moving to a competitor, communicating the departure, and taking data. In many cases, all three elements are present, but this is not necessarily the case. A typical feature of these cases is that the employer often learns of the events gradually, with further facts then emerging in quick succession.
The first part of this series of magazine articles on sensitive resignations addresses the legal framework relating to these three elements. What is permitted, and what is prohibited? The second part of this series examines how the employer can respond to such cases. What measures are available, and when should they be taken?
It is important to distinguish between the non-compete obligation during the employment relationship and the non-compete obligation that applies after the employment relationship has ended, that is, the post-contractual non-compete undertaking. Both obligations have their own requirements and legal consequences.
As part of his statutory duty of loyalty, the employee may not compete with the employer during the employment relationship. The employee may therefore not, in particular, engage in any competing activity, whether on his own account or for a third party. Establishing a competing business for the period after the end of the employment relationship is, in principle, already permitted during the employment relationship. Pure preparatory acts are permissible, for example incorporating a company, registering it in the commercial register, or preparing a website, provided that the business is not yet operating in the market. The line is crossed if the employee already appears in the market during the employment relationship, approaches clients, acquires orders, or takes other actions that amount to actual competition with the employer. So-called roadshows may also constitute impermissible competitive activity.
When the employment relationship ends, the statutory non-compete obligation generally ceases to apply. The employee then remains bound only by the duty of confidentiality with respect to confidential information obtained during the employment relationship. Without a specific agreement, the restrictions mentioned above relating to the non-compete obligation during the employment relationship no longer apply. A restriction is possible only if the parties have agreed a valid post-contractual non-compete undertaking under Articles 340 et seq. CO and that undertaking continues to apply. A post-contractual non-compete undertaking may cease to apply in particular under Article 340c paragraph 2 CO if the employer terminates the employment relationship without the employee having given justified cause for doing so. With regard to the post-contractual non-compete undertaking, reference is made to the two magazine articles that address this topic in detail (Non-competition clauses - often enforceable contrary to widespread opinion; How to phrase a (post-employment) non-competition clause?).
In practice, sound contract management is essential. Post-contractual non-compete undertakings should not only be drafted carefully when the contract is concluded, but should also be reviewed periodically during the employment relationship and adjusted where necessary. This applies in particular where the employee’s role, client contact, or geographic business area changes materially. If an employee starts working in a geographic market different from the one covered by the agreed post-contractual non-compete undertaking, the non-compete undertaking should be updated accordingly. Otherwise, there is a risk in the event of a dispute that the undertaking will not be enforceable, or will be enforceable only to a limited extent.
A sensitive point when changing jobs is communication with the employer’s clients. Many conflicts arise over how employees during their notice period may inform clients of their departure.
During an existing employment relationship, the employee owes the employer a duty of loyalty. According to legal doctrine, the employee may not actively solicit existing clients of the employer. Solicitation includes any attempt to influence clients to switch, for example by promoting the new employer or by targeted contact with that intention. Purely factual and restrained information about the job change is, by contrast, likely to be permissible as a rule. It becomes problematic if the employee specifically tries to influence clients. The boundary is often fluid. If the client expressly asks about the new job on his own initiative, a neutral and factual answer is likely to be permissible, unless the employer has issued a permissible instruction restricting such communication. Such an instruction is permissible insofar as it does not concern client relationships that are akin to personal friendships.
In general, it may be advisable to set out clearly in the employment contract, in policies, or in instructions the rules that apply when informing clients of an employee’s departure. Such rules create clarity on whether, when, and in what form clients may be informed and which communications are reserved to the employer. It may also be appropriate to secure these obligations with disciplinary sanctions in the event of breaches.
The employee is subject to the statutory duty of confidentiality under Article 321a paragraph 4 CO. Under that provision, the employee may not exploit facts that must be kept confidential, in particular manufacturing and trade secrets, nor disclose them to third parties, to the extent required to safeguard the employer’s legitimate interests.
Contractual confidentiality obligations may also apply. Depending on the facts, Article 162 of the Swiss Criminal Code on the disclosure of manufacturing or trade secrets, as well as the Unfair Competition Act, may also be relevant. This applies in particular to the unauthorized use of entrusted work results such as offers, calculations, or plans. Whether these provisions apply depends heavily on the specific confidential nature of the information and the intended use.
These principles provide the framework for assessing whether retaining or removing data is permissible. It is impermissible, in particular, if the employee copies, forwards, transfers to private devices, or retains after the end of the employment relationship client data, price lists, strategy documents, or other internal documents in order to use them for himself, a new employer, or third parties. The employer’s work equipment, documents, and data carriers must generally be returned. Private copies of business records are regularly problematic after the employment relationship has ended.
The handling of the employer’s data and documents should also be clearly regulated contractually or in internal instructions. Depending on the business and the function, it may also be appropriate to provide for disciplinary measures in the event of breaches, as long as those measures are permissible under employment law and proportionate.
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