Modernising the rules of the non-competition clause: what are the plans?
The Dutch government wishes to amend the rules surrounding the non-competition clause – which prohibits employees from doing the same work for a competing company – and make these more stringent for employers. This proposed amendment is intended to prevent the unnecessary and incorrect use of non-competition clauses in order to prevent, in turn, the unnecessary restriction of labour mobility in The Netherlands. The information sheet below lists the announced changes.
Research shows that non-competition clauses are often included as a standard clause, regardless of whether that is really necessary or not, and often are used to retain scarce Dutch employees, while that is not the intended use of the non-competition clause.
4 changes announced
On 6 June 2023, the Dutch government announced the following four future changes with respect to the non-competition clause:
- The law will set the maximum term for which a non-competition clause may be agreed.
- The law will require non-competition clauses to include a geographic scope, and to substantiate this scope.
- Stringent substantiation requirements will also apply to non-fixed-term employment contracts.
- The employer will have to pay the employee compensation when the former relies on the clause.
Questions?
Please contact Sjoerd Remers if you have any questions about the infosheet or the possible consequences of the announced changes for your organization.
