Supreme Court clarifies outstanding issues regarding the employee protection clause (OGH 9ObA 6/26m)

1. Facts of the case

An employee was dismissed. The dismissed employee’s contract of employment contained not only a non-competition clause but also an employee protection clause and a client protection clause, as well as a contractual penalty in the event of a breach of these clauses. The employer considered that the employee had breached all three clauses and consequently brought an action for payment of the contractual penalty.

2. Previous procedure

The case had previously been pending before the Higher Regional Court of Linz; see our blog post of 4 March 2026 for further details. As the Higher Regional Court was unable to reach a definitive assessment of the facts due to the lack of case law from the highest court and differing views in the legal literature, the way was open for the case to proceed to the Supreme Court. The question was whether the same restrictions apply to employee protection clauses as to non-competition clauses (Section 36 of the Employment Contracts Act).

3. What does Section 36 of the Employment Act (AngG) regulate?

A employee protection clause prohibits the contractor from working with employees of the former client following the termination of the employment relationship.

It restricts the validity of non-competition clauses; these are only valid if they contain the following restrictions:

• they must relate to the employer’s line of business,
• they must not exceed one year,
• they must not unreasonably impede the employee’s future career prospects,
• they must only apply to employees of legal age, and
• they must only be applied if the employee’s salary exceeds the remuneration threshold (2026: €4,620 gross).

4. Decision of the Supreme Court

According to the Supreme Court, the applicability of Section 36 of the Employment Contracts Act (AngG) to a specific clause is determined not by its title but by its content. The primary consideration must be whether the clause imposes a restriction on the employee’s right to engage in gainful employment.

The clause in question covered not only the dismissed employee and other employees within the company, but also employees of affiliated companies. Furthermore, the wording of the clause was so broad that the dismissed employee would have been liable had his new employer contacted protected employees from the former company. The employee protection clause thus amounted to a ban on employment within the sector and therefore unreasonably impeded the employee’s career prospects.

Consequently, there was a significant restriction on the dismissed employee’s right to work, which is why Section 36 of the Austrian Employment Act (AngG) and its limitation on the validity of the employee protection clause came into effect. The specific employee protection clause contravened the provisions of Section 36 AngG and was therefore invalid. The contractual penalty was not payable.

5. What does this mean for companies?

Companies must review the content of employee protection clauses, as it is the content, not the title, that is decisive. If the employee protection clause restricts the employee’s right to engage in gainful employment, it must satisfy the requirements of Section 36 of the Employment Act (AngG); otherwise, it is invalid.

About the author:
Ms Mag. Sylvia Unger has been a solicitor for over 25 years and founded her own law firm, ‘Unger Rechtsanwälte’, in 2011.

Her areas of specialism include employment law, company law, contract law and payment transactions law. She is the (co-)author of several specialist books, gives lectures on employment law, company law and payment transactions law, and advises companies across a wide range of sectors.