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Non-competition clause

Employers need to protect their market position.

The imposition of non-solicitation or non-competition clauses on employees can contribute in this respect. The non-solicitation clause is a special form of the non-competition clause.
There are formal legal requirements: the clause must have been agreed upon in writing, and with an employee who is of age. Only if these requirements have been met, the clause will in principle be valid.

In fixed-term employment agreements, agreed upon on or after 1 January 2015, non-competition clauses may no longer be included, unless the non-competition clause is necessary because of compelling business or service interests.

In the latter case, the employer must give reasons in writing in the employment agreement indicating which compelling business or or service interests it concerns, and why the non-competition clause is necessary as a result thereof. The clause has to be formulated very carefully.

Often, there are questions regarding a non-competition clause. Sometimes, it is not clear as to how a non-solicitation or non-competition clause should be interpreted.
In case the clause becomes, as a result of a radical change in the employment relationship (for instance a change of position), a much heavier burden on the employee, the clause may lose its force.

A court may mitigate the non-competition clause in legal proceedings.

If a non-competition clause has been included in the employment agreement and the employee has nevertheless taken up employment with a competitor, an employer can claim fulfilment of the non-competition clause.

Employees who are bound by a non-competition clause are recommended to not enter the service of a competitor without seeking prior legal advice. In case of violation of a non-solicitation or a non-competition clause, often a penalty is payable, which means that violation of such a clause may have far-reaching financial consequences.

Please contact All-Right Advocatuur, without any obligation, if you have any questions in this respect.




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