Non-competition clauses for employers

A non-competition clause limits the employee in the opportunity to work elsewhere after his employment contract.

It is important for the employee to be able to continue practising his trade. This is why strict requirements are imposed on the agreement of a non-competition clause. The (former) employer may only under strict conditions protect his market position by means of a non-competition clause. GMW lawyers advises both employers and employees on non-competition clauses.

Formal requirements of a non-competition clause

The non-competition clause must be agreed in writing with an employee of full age. If the clause is included in a temporary contract entered into on or after 1 January 2015, an additional requirement applies. In that case the employer must substantiate in writing why the non-competition clause is important due to substantial business or service interests.

If one of these requirements is not satisfied, the non-competition clause is void and the employer cannot invoke it after the end of the employment.

Material requirements

If the formal requirements have been met and the non-competition clause is valid, the clause is assessed on its substance.

Does the clause relate to a temporary employment contract? Then the Court will assess whether the non-competition clause is necessary due to substantial business or service interests. It is assumed that the employer cannot suffice by stating that there are substantial business interests which necessitate the non-competition clause. The employer must substantiate which specific substantial interests it concerns and why this restricting clause is necessary. This must show that the advantage for the employer from the non-competition clause outweighs the disadvantages of this for the employee. This is a stringent test. The general rule is that a non-competition clause in a temporary contract is not permitted.

The Court can also declare a non-competition clause in an employment contract for an indefinite period of time to be (partly) inapplicable. The content of the non-competition clause must therefore be tailored to the nature of the company. And also the type of work carried out by the employee. The length of the non-competition clause must be tailored to the length of the employment contract. Employees can claim suspension of a non-competition clause in interlocutory proceedings if the clause prevents them from working anywhere at all for example. The Court always balances the interest of the employer in upholding the clause – such as protection of the products, services and clients – with the interest of the employee to be able to work elsewhere.

Compensation

Finally, the court can order the employer to pay compensation to the employee. In compensation for not being able to work in a similar position elsewhere due to the non-competition clause.

Change of role

In the event of a drastic change of position, it is possible that the non-competition clause is no longer, or no longer fully, applicable. If there is a change of position it is therefore important to review the content of the non-competition clause.

Non-solicitation clause

Instead of the non-competition clause, an employment contract may contain a non-solicitation clause. It means that the employee may work at a competitor of his former employer, but he may not service or approach clients/relations of the former employer. It depends on the type of business whether a non-solicitation clause, a non-competition clause or both give the employer the best protection. The above rules also apply for entering into a non-solicitation clause.

Preventative effect

A non-competition clause has in any case always a preventative effect; there are not many employees who are willing to take legal action on this before the end of the employment contract. The employee who, without consulting and without the consent of his (former) employer takes up employment with a competitor, takes a risk. A risk of having to pay a contractual penalty for example.

Further information

GMW lawyers can advise on drafting or assessing the text of a non-competition clause or non-solicitation clause. We can also advise as to non-competition clause proceedings. If you have any questions, please contact us directly using the enquiry form below or +31 (0)70 3615048. Our pension and employment lawyers will be happy to support and advise you.

More employment law related topics >

Lawyers

Amber Willemsen

Amber Willemsen

Read more about this lawyer
Godelijn Boonman

Godelijn Boonman

Read more about this lawyer
Prof. Hans van Meerten

Prof. Hans van Meerten

Read more about this lawyer
Roos van Zaltbommel

Roos van Zaltbommel

Read more about this lawyer

Looking for an employment law lawyer in The Hague?

GMW lawyers will be happy to help you with all your employment law issues. Our lawyers assist both employers and employees.

Do you have a question? Please feel free to contact us.

"*" indicates required fields

newsletter?

You might also like

Vakantiedagen tijdens ziekte afboeken van saldo of niet

8 July 2024

Vacation days during illness: deducting from balance or not?

A sick employee accrues vacation days in a normal manner. But does a sick employee always have to take days off when going on vacation?

Read more

Read more about
Do you require assistance with an employment dispute?

26 June 2024

Do you require assistance with an employment dispute?

Are you currently facing or anticipating an employment conflict? Employment conflicts can emerge in any workplace. Typically, such disputes can be resolved amicably.

Read more

Read more about
Making progress on the pay gap

19 June 2024

Making progress on the pay gap

Equal pay for men and women is a fundamental European right. In practice, however, there is a big difference between men's and women's pay. There are currently initiatives to reduce the pay gap through legislation in both the Netherlands and Europe.

Read more

Read more about
Ondernemingsraad 2024

17 June 2024

The Works Council in 2024

Companies with 50 or more employees are required by law to have a Works Council. In December 2023, the Minister reported that only 69% of such companies have established a Works Council.

Read more

Read more about
A second trial period: is that possible

27 May 2024

A second trial period: is that possible?

Many employers are in the understanding that a trial period can only be validly agreed upon in the first employment contract with the employee. However, this is not always the case.

Read more

Read more about
End of employment due to restructuring

13 May 2024

End of employment due to restructuring

You have your own business and employ up to 50 people. Unfortunately, for business economic reasons, you are forced to restructure and lay off some employees.

Read more

Read more about
The redeployment condition

1 May 2024

The redeployment condition: what can be expected from your employer?

An employment agreement can, in principle, only be terminated if the following conditions have been met:

Read more

Read more about
Changes to Dutch employment law some things to watch out for

24 April 2024

Changes to Dutch employment law: some things to watch out for

Dutch employment law is constantly changing. 2024 is no different with several interesting pieces of legislation are in the pipeline. Seliz Demirci from GMW Lawyers has the lowdown on the changes to Dutch employment law.

Read more

Read more about
Controversy about the non-compete clause

16 April 2024

Controversy about the non-compete clause

The non-compete clause is not ‘set in stone’. In practice we see many conflicts and proceedings about the non-compete clause, especially in the current tight labour market.

Read more

Read more about