Modernisering, concurrentiebeding, arbeidsovereenkomst, Tweede Kamer

News Update Employment & Pensions

Modernisation of the non-compete clause in the offing
14 June 2023

It has been a while since the Dutch House of Representatives passed a motion asking the government to explore how to ensure the non-compete clause is used only when strictly necessary.

The study then conducted showed that many employers use non-competes as a standard clause in employment agreements, even when employees do not have access to any knowledge or relations that could impair the employer's competitive position. The clauses frequently stipulate a term of more than a year and include multiple fines.

In addition, many employers turned out to use the clause improperly: to prevent employees who are difficult to replace from leaving. Last year, the Dutch Supreme Court ruled (in Dutch) that the non-compete clause serves to protect organisations' market position (including accrued goodwill, know-how and business relations) and not to bind employees. Not even when a tight job market has made it more difficult for employers to find replacements.

On 2 June 2023, Minister Van Gennip of the Ministry of Social Affairs and Employment sent a letter to the Dutch House of Representatives stating that she would incorporate the following changes into a bill:

  • Statutory time restrictions for non-compete clauses will be introduced.
  • The non-compete clause must be geographically delineated, specific, and substantiated in the employment agreement.
  • In employment agreements for an indefinite term, employers must also explain what substantial business interests are served by the non-compete clause. This is consistent with today's practice for fixed-term employment agreements.
  • If an employer invokes the non-compete clause against an employee who is leaving, the employer must compensate them. This payment, which will be a legally defined percentage of the employee's most recent salary, will make employers think twice about including and invoking a non-compete clause.

The bill will likely be submitted for online consultations at the end of 2023.

Written by:

Key Contact

Advocaat | Partner