Non competition clause in The Netherlands

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Non-compete agreement in Dutch Labour & Employment Law

lawyer amsterdam dutch non compete competition netherlands

Non-compete and non-competition clause in the Netherlands. Our Dutch lawyers in Amsterdam specialize in drafting and litigating non compete agreements. Many Dutch employers add non-compete clauses to employee contractsA non-compete clause or agreement is an agreement between two parties, usually employee and employer, that the employee will not enter into or start a similar profession or trade in competition with the other party. Employers may require non-competition agreements for a variety of reasons: a non-compete clause in Dutch Labour & Employment Law protects business and can help a business retain valuable employees.

Non-compete clauses in the Netherlands: reasonable scope and duration

Employers may include (in written) post-termination non-competition clauses in employment contracts for employees over the age of 18. Non-compete clauses and agreements regarding Dutch Labour & Employment Law can however not simply be a blanket prohibition from competition for an extended period of time. A non-compete clause must not infringe on a person’s ability to make a living, so it must have a reasonable scope and duration. Many jurisdictions in The Netherlands disfavor non-compete clauses as limitations on a former employee’s right to earn a living: a Dutch court may declare a part or the entire clause void if the employee is

  • unfairly prejudiced
  • in comparison to the employer’s interests.

Non-complete clauses in The Netherlands are not enforceable if the non-compete clause is not reasonable with reference to the interests of the parties.

Non-competition clauses in contractor agreements

Non-compete clauses may also be a part of an contractor agreement (between a contractor and the Principal). A recent decision by the Rotterdam District Court makes clear that in that case, the rules of the employment contract (Dutch Labour & Employment Law) do not apply to these kind of non-competition clauses:

The cantonal judge rules as follows.Although X states that the performance of the contract has characteristics of an employment relationship, it acknowledges that the legal relationship between the parties is, however, governed by a contract of assignment. This means that the provisions of Section 7: 653 of the Dutch Civil Code do not apply to the legal relationship between the parties. There is no room for an analogue application, since the support for this can not be found either in law or in case law (HR 9 July 1990, ECLI: NL: HR: 1990: AC0964).

Non-competition clause in the Netherlands reasonable?

The court always has to investigate whether a non-competition clause is reasonable. In doing so, a balance is made between the right to free choice of employment and the interests that the employer has in enforcing non-compete clauses (if the employee is unfairly prejudiced in comparison to the employer’s interests that require protection): When answering the question whether the non-competition clause between the parties is unacceptable according to standards of reasonableness and fairness, a criterion based on restraint must be applied.

The court takes into account that the right to free choice of employment is an important right that is enshrined in the Constitution. For this reason, even in the present case, in which Article 7: 653 of the Dutch Civil Code does not apply, not every contractual limitation of this fundamental right can be maintained. In this connection, the court makes a weighing of interests, in which all facts and circumstances of the case play a role (Hof ‘s-Hertogenbosch 8 January 2013, ECLI: NL: GHSHE: 2013BY8162). In this regard, the District Court considered that a non-competition clause of two years and a geographical range of 35 kilometers is not in itself unreasonable. In the opinion of the subdistrict court judge, a temporal scope is not unusual for the duration of two years when a non-competition clause is concluded. In view of these limitations, the content of the stipulation is not unreasonable in itself.

Non compete clauses: interests

The subdistrict court judges that CTW has an obvious interest in enforcing the non-competition clause, since it wishes to prevent X from competing at the end of the contract. This is all the more true, now that it is a fact of common knowledge that CTW is located in a shrinking region.In short, if an employer has a great interest in the non-compete stipulation, then in principle it remains valid. However, when a person is unfairly disadvantaged by a stipulation in view of the (often small) interests of an employer, the stipulation can be annulled.The non-competition clause can be completely rejected according to Dutch Labour & Employment Law, but can also be partially rejected. In general, if a company works nationwide, a national ban might be accepted.

Vague or confusing non-competition clause: contra-proferentem

A non-competition clause should not be too broad in scope or vague: such a non-competition clause might

  • make an infringement of free choice of labor
  • and can therefore be left out of application by the judge.

After all, the question is whether an employer has, according to Dutch Labour & Employment Law, a reasonable interest in such a broad competition clause. In general it could be maintained that if the contract is unclear this will be borne by the author of the contract, District Court of Maastricht of May 17, 2010:

It is also important that the article has been drawn up by RD4 and, bearing in mind the contra-proferentem rule, ambiguities in the letter of the contract must be brought to the disadvantage of the author of the contract.However, the starting point in Dutch Labour & Employment Law is that in the case of an explanation of an unclear provision, the sentence that the parties could, in the given circumstances, reasonably give to the provision and to what they could reasonably expect from each other in that respect. According to the Supreme Court, this is not an incorrect vision (also in the case of a non-competition clause; Supreme Court 4 April 2003, JAR 2003/107).

Dutch Employment Law: Worker can be compared to a consumer

The counter-profit rule (in case of lack of clarity, a clause must be interpreted to the detriment of the party who stipulated the provision) appears from the point of view of inequality compensation also applicable to non-compete clauses, because the employee / contractor in general formulation is the weaker party of the contract. In this respect, a worker can be compared to a consumer.

Non-competition clauses in fixed-term employment contracts

As of January 1, 2015, non-competition clauses in fixed-term employment contracts are not allowed,  unless they are necessary to protect a legitimate business interest and the business interests are clearly described in the employment agreement or non-competition clause.

Contact Our Non-Compete Lawyer in Amsterdam

Our Dutch Labour & Employment Contract lawyer in Amsterdam represents both businesses and individuals, whether the scope of representation involves drafting or reviewing a non-compete or non-solicitation agreement, or litigating disputes arising out of non-competition clauses.

Getting help with a Dutch Labour & Employment Law lawyer in Amsterdam

Please contact our lawyers if we can assist you with any labour relations matters whether you are an employer or employee. Our lawyers in Amsterdam will advocate on your behalf with strong and knowledgeable legal counsel. Our goal is to resolve legal matters through a tactful negotiation, if possible, and by decisive litigation when it is not. For further information about Dutch Employment and Labour Law, please contact our Employment Contract lawyer mr. P.Chr. Snijders in Amsterdam: 0031 20 5221999.

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