Working in the Netherlands: non-compete clauses

The Legal Expat Desk (LED) is an information hub by GMW Advocaten, advising the expat community living and working in the Netherlands since 2006. LED regularly publish articles covering a wide spectrum of legal topics.

Most employment agreements contain a non-compete or business relations clause. A big misunderstanding is the following: many employees seem to believe that these clauses can be violated without any consequences.

Let me help you out of that dream as soon as possible. When such a clause has been agreed upon in the right way - namely in writing and with a person above the age of 18 - it is binding. In the case of a breach, you will incur an immediately-payable contractual penalty.

Negotiate an annulment

Of course, you can take action if you want the clause to no longer apply. Most often, as an employee, you can inform your employer of your intention to leave and then try to negotiate.

You can state that the clause will not stand up in a court of law because it is too far reaching or has lost its validity (due to another job or bigger responsibilities).

You can also claim that the new position that has been offered will lead to a substantial improvement. Your interests should therefore prevail above those of the employer.

Depending on your arguments, an employer will be prepared to either limit the clause or annul it.

Whatever happens, you must make sure the clause is no longer in place when you start working for clients or competitors.

Working for a competitor or client

The next question that often arises is the interpretation of the clause: is the new employer a competitor or a client?

In a recent case a judge was asked to interpret the word "relation" in a business relations clause. The subdistrict court decided that not only existing relations, but also contacts that might become business relations, fell within the scope of the clause.

The employee appealed and the Court of Appeal judged that the interpretation given by the lower court was too restrictive. Not only should the subdistrict court have looked at the linguistics of the clause, the whole context should have been taken into consideration.

In the opinion of the Court of Appeal, a general answer, that defines a relation of the employer, is not possible. Each case has to be looked at individually and depending on the specific circumstances, one must determine who can be seen as a relation.

Aim for clarity and limitation

In general it is wise to make sure the non-compete and/or relations clause are as clear in wording as possible. Try to negotiate and make the clauses as restricted as possible.

In the case of a non-compete, the term should not be longer than one year and the geographic span can be limited to the region in which you mostly work. In the case of a business relations clause, try to be as specific as possible and limit the term to one year.

When in doubt, contact a specialist. It is cheaper to get good legal advice before taking action, than trying to solve problems afterwards.

One more piece of advice: on January 1, 2015, the law is changing. A non-competition clause is no longer allowed in a fixed term contract (unless the necessity of such a clause is specified in light of severe company interest).Therefore: beware!

Godelijn Boonman is Attorney-at-Law at GMW Advocaten / Legal Expat Desk. For more information, please comment below.