Is my non-competition clause valid and can I be released from it?
Found a new job, but your current employment contract contains a non-competition clause? Or do you want to start working as a self-employed person, but are you afraid that your former employer will prohibit you from working with clients? A non-competition clause can seriously limit your career opportunities. Fortunately, not every non-competition clause is simply valid. In this article you will read when a non-competition clause is legally valid, when the court can mitigate or annul it, and what options you as an employee have to get out of it.
What is a non-competition clause?
A non-competition clause is an agreement in your employment contract stating that after the termination of the employment relationship you may not compete with your (former) employer. This means, for example, that you may not work for a competitor or start your own business in the same sector. The purpose of a non-competition clause is to protect the employer against competition from former employees who have acquired business knowledge and customer contacts.
Besides the non-competition clause, there is also the non-solicitation clause. Under a non-solicitation clause, you are permitted to work for a competitor, but not to collaborate with customers or relations of your former employer. Strict statutory requirements apply to both clauses.
When is a non-competition clause valid?
Not every non-competition clause in your employment contract is automatically valid. The law imposes strict requirements on its validity. If these conditions are not met, you may disregard the clause.
Written form: the clause must be on paper
A non-competition clause is only valid if it has been agreed upon in writing. An oral agreement or an unsigned clause has no legal force. Therefore, always check whether you have actually signed a written employment contract containing a non-competition clause.
Only in the case of a contract for an indefinite period
Since 1 January 2015, a non-competition clause may in principle only be included in an employment contract for an indefinite period. Do you have a temporary contract? Then your employer may not include a non-competition clause, unless this is motivated in writing with compelling business or service interests.
In practice, this reasoning is often not strong enough.Arslan & Arslan Advocatenregularly sees that employers have included a non-competition clause in temporary contracts without proper substantiation. In such a case the clause is null and void and you can ignore it.
Clear Description
A valid non-competition clause must clearly describe which activities are prohibited, in which geographical area and for what duration. A clause that is formulated too vaguely or broadly may be declared invalid by the court. If, for example, your contract states that you “may not work anywhere in the Netherlands in the same sector”, this may be too broad.
When can the court annul or mitigate a non-competition clause?
Even if a non-competition clause appears formally valid, the court may annul or mitigate it in whole or in part. In doing so, the court weighs the interests of the employer and employee against each other.
Disproportionate restriction of the employee
If the non-competition clause disproportionately restricts your opportunities to find employment elsewhere, the court can annul it. This applies in particular when:
- The clause lasts too long (longer than one or two years)
- The geographical area is too large
- The prohibition is formulated too broadly.
- Due to the clause, you can hardly work anywhere in your field anymore.
The court always considers the specific circumstances. Do you have a highly specialized position in which a restriction is necessary to protect trade secrets? Then the court will be more inclined to accept a clause. Do you work in a general position in which your knowledge is not unique? Then a broad non-competition clause is more readily unreasonable.
No compelling interest of the employer
The employer must have a compelling interest in the non-competition clause. This may, for example, be the protection of confidential company information, know-how or customer relations. If the employer does not have this interest, or if it does not outweigh your interest in free choice of employment, the court may annul the clause.
Moderation instead of annulment
Sometimes the court does not set aside the non-competition clause in its entirety, but moderates it. This means that the clause remains in force, but that the conditions are relaxed. The court may, for example:
- Shortening the duration from two years to six months
- Limiting the geographical area
- Making the prohibition more specific
- Awarding compensation to the employee
How can you get out of a non-competition clause?
Do you have a non-competition clause in your employment contract and do you wish to accept this new job or start as a self-employed person? There are various ways to try to get out from under the clause.
Check the validity
First check whether the non-competition clause is valid at all. Ask yourself:
- Has the clause been agreed upon in writing?
- Did you have a permanent contract, or, in the case of a fixed-term contract, was there a compelling reason?
- Is the clause sufficiently clear and specific?
- Is the duration, the territory and the scope not too broad?
If the answer to one of these questions is "no", you may already have a strong argument that the clause is not valid.
Negotiate with your employer
If the clause appears to be valid, you may attempt to negotiate with your (former) employer. Many employers are willing not to enforce the clause provided you are transparent about your plans and can demonstrate that you will cause no direct harm. Explain why the clause disproportionately restricts you and inquire whether the employer is prepared to withdraw or mitigate the clause.
Arslan & Arslan Advocatenregularly assists employees in negotiating with employers regarding non-competition clauses. A well-substantiated letter from a lawyer may already be sufficient to convince the employer.
Commence proceedings before the court
If negotiating does not help, you can ask the kantonrechter to annul or mitigate the non-competition clause. This can be done via summary proceedings (kort geding) or proceedings on the merits (bodemprocedure). The judge will then assess whether the clause is legally valid and whether the interests are balanced.
In practice, we see that judges are critical of non-competition clauses that are too broad or too long, especially if the employee is thereby unable to find work.
Note: breach may lead to damages
If you breach a valid non-competition clause without the permission of the court, you risk a high penalty or damages. Many non-competition clauses contain a penalty clause of several thousand to tens of thousands of euros per breach. In addition, the employer may hold you liable for the damage suffered. Therefore, never simply disregard a non-competition clause without obtaining legal advice.
Difference between non-competition clause and non-solicitation clause (relatiebeding)
In addition to the non-competition clause, a non-solicitation clause (relatiebeding) is also often included. The difference:
- non-competition clauseYou may not work for a competitor or start a competing company yourself.
- Non-solicitation clause (relatiebeding)You may not work with customers, suppliers or relations of your (ex-)employer
For non-solicitation clauses, similar requirements apply as for non-competition clauses. A non-solicitation clause must also be in writing, clearly defined and not disproportionately burdensome. The court can also mitigate or annul a non-solicitation clause if it excessively restricts the employee.
Practical tips regarding a non-competition clause
Tip 1: Read your employment contract thoroughly
Check whether a non-competition clause or non-solicitation clause (relatiebeding) is included, and read the terms carefully. Pay attention to the duration, the geographical scope and the description of the prohibited activities.
Tip 2: Seek advice before accepting a new job
Do you have a non-competition clause and are you receiving an attractive offer from a competitor? First have a lawyer assess whether the clause is valid and what the risks are.
Tip 3: Communicate openly with your employer
If you intend to take any action that may be in breach of the non-competition clause, discuss this with your employer in good time. There is often scope for a solution.
Tip 4: Document everything
Keep all communication with your employer regarding the non-competition clause. This may later prove important if a dispute arises.
Tip 5: Engage legal assistance in a timely manner
Do not wait until your employer takes you to court. AtArslan & Arslan Advocatenwe can proactively advise you and assist you in having the clause moderated or annulled before you encounter problems.
Recent developments in case law
The judge has become more critical of non-competition clauses in recent years, especially where these seriously restrict employees in their career opportunities. Judges carefully weigh the interests of both parties and do not blindly assume the validity of a clause.
We also see that courts are increasingly willing to moderate a clause rather than uphold it in full, particularly where a suitable alternative exists that protects both parties. This offers employees greater scope to continue their careers without disproportionate restrictions.
Conclusion: know where you stand
A non-competition clause can have major consequences for your career, but it is not always valid or enforceable. Always check whether the clause meets the statutory requirements, negotiate with your employer and engage legal assistance if necessary. The court can annul or moderate an unreasonable clause, allowing you to still accept your new job or start as a self-employed person.
Do you have questions about your non-competition clause or would you like to know whether you can be released from it? Please contact Arslan & Arslan Advocaten.Call us on 070 4500 300 or visit our website https://Employment Law-arslan.nl. Our lawyers have extensive experience in employment law and are happy to assist you further.
Frequently asked questions about non-competition clauses
How can I get out of a non-competition clause?
You can get out of a non-competition clause by disputing its validity (for example because it is not in writing or in the case of a fixed-term contract without a compelling reason), by negotiating with your employer about withdrawal or adjustment, or by asking the cantonal court to annul or moderate the clause on the grounds of disproportionate restriction.
Is a non-competition clause legally valid?
A non-competition clause is only legally valid if it has been agreed upon in writing, is included in a contract for an indefinite period (or in the case of a fixed-term contract with compelling reasons), is formulated sufficiently clearly and is not disproportionately burdensome for the employee. If the clause does not meet these requirements, it is not valid.
Can I negotiate a non-competition clause?
Yes, you can always negotiate a non-competition clause, both before you sign the contract and during or after the employment relationship. Many employers are willing to amend or revoke the clause if you can demonstrate that it disproportionately restricts you and does not cause direct damage to the employer.
What are the rules regarding a non-competition clause?
The most important rules are: the clause must be in writing, may only be included in a contract for an indefinite period (or a fixed-term contract with a compelling reason), must clearly describe what is prohibited (activities, territory, duration), and may not disproportionately restrict the employee. The court may annul or moderate a clause that does not meet these requirements.
