Non-competition clauses for music teachers

Question from an SMPV member: My music school has started offering adult lessons. It has sent notice of termination to all teachers and asked them to sign a new contract in which the teacher is no longer permitted to give private music lessons in the music school's catchment area. Exceptionally, this ban on competition will be lifted if the music teacher notifies the music school of the students concerned and obtains permission.

Question from another SMPV member: A music teacher resigned from a music school and received a letter from the principal stating that her pupils were to remain at the music school. The music teacher had to confirm this with her signature and send the letter back to the head teacher.

Basic principles: During an ongoing employment relationship, the employee is subject to the duty of care and loyalty in application of Art. 321 a CO (Swiss Code of Obligations). In particular, it states that during the term of the employment relationship, the employee may not perform any work for a third party in return for remuneration if he thereby breaches his duty of loyalty, in particular if he competes with the employer. Competition is deemed to exist if equivalent services are offered that satisfy the same customer needs and concern an at least partially overlapping clientele. This applies in full to full-time employees. Part-time employees are often financially dependent on being able to pursue another activity. With the agreement of a part-time workload, the employer and employee therefore tacitly assume that the employee will pursue additional secondary activities, in particular in their traditional field of activity, and that the prohibition of competition is waived. However, this presumption of tacit approval by the employer only applies if there are no conflicts of interest between the various part-time jobs and the duty of loyalty under employment law is thereby upheld. In addition, the parties can expressly agree that competing part-time work is prohibited. Instead of a complete ban on other part-time work, regulations according to which competing other part-time jobs may only be carried out with the prior written consent of the employer are common in practice.

In principle, it is lawful for an employer to conclude contracts only on the condition that teachers do not engage in competing activities, whether privately or with other music schools. Music schools are also at liberty to issue a so-called notice of termination with a change of contract by giving formal and timely notice and requesting that a new contract with such a non-competition clause be concluded. Music schools are also not legally prohibited from introducing a notification and approval requirement for such competing activities instead of a complete ban. The music school's approach is therefore legally correct.

The following must be clarified for employees who receive such an offer from their employer:

-Objectively: Are these competing activities at all?

If only children/young people or only adults are taught at the music school, private lessons or lessons at another school are not in competition if the same groups of pupils are not addressed.

-Locally: Is the competing activity of a teacher even in the catchment area of the music school?

The teacher only competes with the music school if the same groups of pupils are addressed, i.e. the pupils taught by the teacher would have come to the music school without the teacher's activity. Therefore, the catchment area of the music school must be specifically limited in such regulations and a private activity must be carried out slightly outside of it.

-Content: Is the specific instrument or subject taught by the music teacher at the music school?

If a music teacher teaches other instruments or subjects privately than those offered at the music school, they are not competing with the school and can teach without further ado.

In any case, disregarding the contractual duty of loyalty, in particular the non-competition clause, is dangerous, as this has repeatedly led to dismissals without notice in court practice.

Basic principles: The statutory non-competition clause of Art. 321 a. CO ends with the termination of the employment relationship. This means that an employee can in principle take up new employment privately or with an employer in competition with the previous employer immediately after termination of the employment contract. It is irrelevant that the departing employee may take with him or her essential knowledge from his or her previous employment and now use it in the service of the new employer or for his or her own private gain.

This situation can only be prevented by the employer and employee agreeing a non-competition clause for the period after termination of the employment relationship (Art. 340 et seq. CO). However, such a non-competition clause is only binding within narrow limits. In particular, the employee must have been granted access to the clientele or to manufacturing and business secrets during the employment relationship and the use of this knowledge must be capable of causing significant damage to the employer. In addition, a post-contractual non-competition clause must be agreed in writing, otherwise it is invalid. Verbal agreements or agreements by email are not sufficient. Furthermore, the non-competition clause must be reasonably limited in terms of place, time and subject matter and may only exceed three years in very special circumstances. Excessive non-competition clauses cannot be enforced in court, but will be restricted or revoked accordingly by the judge. The following therefore applies to music teachers:

- A post-contractual non-competition clause does not apply automatically.

- After termination of the employment relationship, the music teacher is free to decide whether he/she wishes to work at other music schools and/or as a private teacher.

- There is no obligation to conclude a non-competition clause.

- A non-competition clause is only valid in writing, i.e. signed by hand or with a certified signature.

- A non-competition clause must be clearly and strictly limited in terms of location, valid for less than 3 years and limited only to the activity carried out at the music school.

Even if all these requirements are met when agreeing a non-competition clause, the employee has a good chance that a post-contractual non-competition clause will be deemed invalid by a court. This is for the following reasons:

The non-competition clause is only binding if the employment relationship gives the employee insight into the clientele or into manufacturing and business secrets and the use of this knowledge could significantly harm the employer (Art. 340 para. 2 CO). According to established doctrine and case law, there is no room for a non-competition clause if the relationship with customers is primarily based on the employee's special skills, on his personal skills and if the relationship between him and the customers is primarily of a personal nature. In this case, the customers do not follow the employee because of the knowledge acquired from the employer, but because of the employee's special personal qualities and ability. In this case, the employee does not use skills acquired from the employer post-contractually, but rather his personal character traits, the utilization of which cannot be prohibited by a non-competition clause. This has been affirmed in court practice, for example, for gymnastics and dance teachers, a ladies' hairdresser, a riding instructor and, in the canton of Geneva, for a piano teacher. In all these professions, the performance and success of the employee does not depend primarily on the knowledge and services offered by the employer, but on personal characteristics. These alone are decisive for the possible change of clientele, and the more creatively and freely the employee can act, the more likely this is to be assumed (judgment of the Zurich High Court of 4.3.2008, BGE 130III353 ff. and BGE 138III67 ff.). There is therefore a good chance that even a post-contractual non-competition clause that appears to be valid would not be protected by a court on this basis and that the employee can work freely or in competition with the former employer after termination of the employment contract.

The non-competition clause lapses if the employee can prove one of the following facts:

- If the employer has no significant interest in maintaining it (it ceases operations or no longer offers the relevant subject).

- If the employer terminates the employment relationship without the employee having given him reasonable cause to do so.

- If the employee terminates the employment relationship for a justified reason for which the employer is responsible.

It is important to always clarify the validity of a non-competition clause, especially as there can be serious consequences if a valid non-competition clause is breached: On the one hand, the employer can demand the cessation of the competing activity, on the other hand compensation for damages (e.g. loss of profits) and, if agreed, contractual penalties.

The music teacher does not have to sign such a letter from the head teacher. Without this signature, no post-contractual non-competition clause applies (unless such a clause has already been concluded in the employment contract or otherwise). The music teacher can therefore take over the pupils they have brought to the music school after the end of the employment relationship if they wish. However, even if a written non-competition clause had been agreed beforehand or in response to this letter, the music teacher would have a good chance of it being declared invalid by a court for the reasons mentioned above. It is therefore worth clarifying the situation precisely in these cases and not allowing yourself to be restricted in the organization of your post-contractual professional life. It is important that the music teacher informs the head teacher that a post-contractual non-competition clause for music teachers is unlikely to be legally enforceable. There is no supreme court ruling on this, only cantonal rulings exist. This means that ultimately a certain residual risk cannot be ruled out before a federal court ruling is available. However, it is worth defending yourself, both against the signature and against the enforcement of such a non-competition clause.