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A non-compete clause by no means always holds up. Three common reasons render the clause worthless: a formal error or missing justification, a significant change in function that renders the clause obsolete, and moderation or annulment by the court.
1. An error in the drafting of the clause
Strict requirements apply to a non-competition clause (Article 7:653 of the Dutch Civil Code): it must be agreed in writing with an adult employee, and in the case of a temporary contract, it must also be justified by a compelling business interest. If that written justification is missing, the clause is invalid.
2. A substantial change of function
If the employee's position changes substantially, a previously agreed non-competition clause may become more burdensome than intended. According to case law, you must then renegotiate the clause; if you fail to do so, it may (partially) lose its effect.
3. Mitigation or annulment by the court
Even a valid clause can fail. The court can moderate or annul it if it unfairly disadvantages the employee in relation to your interest — for example, in the case of an excessive duration, an excessive scope, or an overly broad description. And in the event of seriously reprehensible conduct on your part as an employer, the employee may be able to escape it entirely.
This is how your clause will hold up
Formulate the clause clearly defined and well-substantiated, justify it in writing for temporary contracts, and renegotiate it in the event of a significant change in function. Consider whether a lighter non-compete clause suffices; this is often easier to uphold.
Frequently Asked Questions
When is a non-compete clause invalid?
Including in the event of a formal error, a temporary contract without written justification, or following a significant change in position without renegotiating the clause.
Can the judge modify my clause?
Yes, the judge can moderate or annul an overly broad clause if it unfairly disadvantages the employee.
Is a non-compete clause an alternative?
Often, yes. It is less invasive and therefore usually stands up better.
A non-compete clause that holds up?
Our legal experts draft an enforceable non-competition clause and incorporate it into your employment contract. View our employment lawteam or schedule a free consultation.
