REFORM OF THE NON-COMPETITION CLAUSE IN THE DUTCH EMPLOYMENT CONTRACT

16/06/2023

To protect company interests, many employers include a non-competition clause in the employment contract, usually as a standard clause. The investigation by the Panteia agency has shown that the use of the non-competition clause is so wide that it can lead to an unjustified limitation of employees. Also the proper functioning of the labor market would be affected, in the first place employees would be restricted from changing jobs and continuing to work within their expertise and specialism, and secondly, it would be more difficult for employers to hire new staff. The government therefore wants to reform the non-competition clause.

Minister Van Gennip therefore intends to elaborate the following changes in a bill:

• legally limit the duration of the non-competition clause;
• when including the non-competition clause, the geographical scope must be included, specified and justified;
• when including the non-competition clause, employers will also have to justify 'the weighty business interest' of including a non-competition clause in the case of permanent employment contracts. This is already the case for fixed-term employment contracts;
• when invoking the clause, the employer will in principle have to pay a compensation, set at a percentage determined by law of the employee's last salary.

 

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References:

https://www.rijksoverheid.nl/actueel/nieuws/2023/06/02/kabinet-legt-concurrentiebeding-aan-banden

https://www.rijksoverheid.nl/documenten/kamerstukken/2023/06/02/kamerbrief-hervorming-van-het-concurrentiebeding