Do I have to comply with a non-compete clause in my employment contract?
Only under narrow conditions — and many clauses are drafted too widely to bind. Liechtenstein employment contract law sits in Section 1173a ABGB (LR 210.0) and is modelled on the Swiss Code of Obligations (Art. 340–340c). A post-contractual non-compete clause binds only if it is agreed in writing, you had insight into the client base or into manufacturing and business secrets, and that knowledge could substantially harm the employer. It must be limited by place, time and subject matter and must not unfairly impede your advancement — the duration is as a rule at most three years. Two common misconceptions: first, the employer owes no compensation (unlike in Germany) — the Swiss model requires none. Second, the clause lapses if the employer terminates without fault on your part (Section 1173a Art. 68(2) ABGB).
📋 The rules
- Requirements (Section 1173a Art. 65 ff. ABGB): Written form, insight into the client base or business secrets, and the possibility of substantial harm to the employer. If one of these is missing, the clause does not bind.
- Limited by place, time, subject: The clause must be limited geographically, in time and in subject matter and must not unfairly impede your economic advancement; the duration is as a rule at most three years.
- The judge may reduce it: An excessive clause is cut back by the court at its discretion — a clause drafted too widely is therefore not simply enforced in full.
- No compensation required: Under the Swiss model that Section 1173a follows, compensation is not prescribed. It may be agreed, but is not a condition of validity — unlike, for example, in Germany.
- Lapse (Section 1173a Art. 68 ABGB): The clause lapses if the employer terminates without justified cause, or if the employee terminates for a reason for which the employer is responsible — likewise if there is no longer a substantial interest.
🔓 Exceptions
- No qualified insight: Whoever had no access to the client base or secrets is not bound — the clause is void from the outset.
- Termination without your fault: If the employer terminates without cause or you give him a justified reason to terminate, the clause lapses (Section 1173a Art. 68(2) ABGB).
- Contractual penalty agreed: If a contractual penalty is agreed, you can — unless otherwise agreed — free yourself from the clause by paying it; specific performance (an injunction) is possible only with an express reservation.
⚠️ Penalties & fines
If the employee breaches a valid clause, damages and a penalty loom — but rarely a full injunction. In principle the employee owes damages, which the employer must, however, quantify and prove (Section 1173a Art. 67 ABGB). If a contractual penalty is agreed, it falls due; absent any other arrangement, the employee can free himself by paying it. Specific performance, that is a court ban on the competing activity, requires an express written reservation and a prevailing interest — it is the exception. The item nobody thinks of: because clauses drafted too widely are often void or cut back by the court, the employer risks enforcing nothing at all with an overreaching clause. Conversely, the employee harms himself by pre-emptively obeying a clause that is in truth void and thereby turning down a job he was free to take.
📎 Official sources
- Gesetze.li · ABGB (LR 210.0), Section 1173a Art. 65–68 (non-compete) — consolidated version →
- National Administration · Office of Economic Affairs, private employment law (home) →
- LANV — Liechtenstein Employees Association, statutory bases →
❓ Frequently asked
Is every non-compete clause in the contract valid?
No, it binds only in writing, with insight into the client base or business secrets and where substantial harm to the employer is possible. It must also be limited by place, time and subject matter, otherwise the court cuts it back or it is void.
How long may a non-compete last?
As a rule at most three years, and only in special circumstances longer, for instance with exceptional insight into business secrets. A clause that is excessive in time is cut back by the court at its discretion to a permissible level rather than being enforced in full.
Does the employer have to pay me for it?
No, Liechtenstein law follows the Swiss model and requires no so-called garden-leave compensation. Compensation may be agreed voluntarily, but it is not a condition for the validity of the clause — unlike, for example, in Germany.
Does the clause apply if I am dismissed?
Not if the employer terminates without justified cause, or if you terminate for a reason for which the employer is responsible. In that case the non-compete lapses under Section 1173a Art. 68 ABGB, because an employee dismissed without cause should not be further impeded.
What happens if I breach it?
You owe damages, which the employer must quantify and prove, and where agreed a contractual penalty. A court ban on the activity as specific performance is possible only with an express written reservation and remains the exception in practice.
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