The non-competition clause

The non-competition clause

Dutch employment agreements often include non-compete clauses. The non-competition clause comprises the agreement made between the employer and the employee that, at the end of his employment agreement, the employee will not exercise similar work activities at a company that competes with the employer, or as an independent party.

Agreeing to a non-competition clause

A non-competition clause must be agreed in writing between the employer and the employee in order to be valid. When agreeing to a non-compete clause, the employee must also be of age, on pain of invalidity of the clause.

Penalty for breaching non-competition clause

In order to encourage an employee to honour the non-compete clause, the clause usually contains a so-called penalty clause. Using such a clause, the employer and the employee agree that the employee must pay a monetary penalty if he breaches the non-competition clause.

Non-competition clause in a fixed-term employment agreement

The inclusion of a non-competition clause in a Dutch fixed-term employment agreement concluded for a maximum duration of six months is not permitted. This is indeed possible in fixed-term employment contracts lasting longer than six months, but only if the employer can demonstrate that a compelling business or service interest exists for the inclusion of such a clause. Justification of this interest is required in the employment agreement. Without justification, the clause is not valid. For permanent employment contracts, the requirement of justifying a compelling business or service interest in the employment agreement does not apply.

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.