The non-competition clause

The non-competition clause

Employment contract

An employment contract may contain a non-competition clause. According to the law, a non-competition clause must have been agreed in writing with an employee of majority age. A non-competition clause specifies that following the termination of his employment with his current employer, the employee is restricted in his choice of work in certain respects. Employment law stipulates that the non-competition clause must state exactly which activities it covers. Since a non-competition clause affects the significant interest of the employee to decide for himself how he earns his livelihood, legal conflicts about non-competition clauses are regularly put before the courts.

Non-competition clause must be set down in writing

In particular, the requirement that non-competition clauses be set down in writing results in many legal disputes (court cases). This requirement is based on the notion that the employee will, as a result of the non-competition clause being set down in writing, at least have had to properly consider the possible consequences of the non-competition clause. Within this context, the High Council of Justice has ruled, inter alia, that a non-competition clause must be agreed in writing again if an employee moves from a subsidiary to the parent company. Another example of a situation in which it is necessary under employment law to agree a non-competition clause again is the case in which a business (company) is transferred to a limited company (B.V.) or public limited company (N.V.). Similarly, if major changes are made to the employee’s job (as a result of which the non-competition clause has become more onerous), the non-competition clause must be agreed again in writing.

Employment conditions regulations

Usually, a non-competition clause is contained in the employment contract itself. However, in 2008 the High Council of Justice ruled that a non-competition clause could also be included in employment conditions regulations. If the employment contract or a letter refers to employment conditions regulations and the employee gives his assent to the content of the attached employment conditions by signing that employment contract, then the written form requirement under employment law has been fulfilled.

Weighing the interests

Alongside these formal requirements for the existence of a non-competition clause, a possibility exists in law for the employee (or his employment lawyer) to ask the judge to nullify the non-competition clause in whole or in part. This is possible if the employee is unfairly disadvantaged by that clause in relation to the interest of the employer, which is being protected. This therefore involves weighing up the two interests in employment law. The judge can rule that a non-competition clause should be restricted with regard to the type of activities to which it applies, but the judge can also reduce the duration of the non-competition clause and limit its geographical effectiveness.

Specialist in non-competition clauses

The non-competition clause can therefore lead to legal disputes (court cases) in various ways. If you have a problem with a non-competition clause, it is advisable to get legal advice from a specialist in the field of employment law. The lawyers at AMS Advocaten have extensive experience of handling disputes about non-competition clauses. AMS Advocaten supports both employers and employees in such matters. If a question like this is at issue for you, the employment law specialist at AMS Advocaten will be pleased to provide you with legal advice.