What is a non-compete clause and when is it valid?

A non-solicitation clause prohibits a former employee from doing business with the employer's business relations after leaving employment. It is a form of non-competition clause and is only valid if agreed upon in writing with an adult employee — and, in the case of a temporary contract, furthermore, if justified by a compelling business interest.

What is a non-compete clause?

A non-solicitation clause is a softer variant of a non-competition clause. It does not prohibit the former employee from working for a competitor or starting their own business, but it does prohibit them from maintaining contact with or working for the former employer's business relations, such as customers and suppliers. Without such a clause, the employee is, in principle, free to compete.

When is a non-compete clause valid?

Because the non-solicitation clause is a special form of the non-competition clause, the same requirements apply (Article 7:653 of the Dutch Civil Code): it must be agreed upon in writing with an adult employee. In a fixed-term employment contract, a non-solicitation clause is only valid if the employer provides written justification for the compelling business interest that makes the clause necessary.

What is a 'relationship'?

Describe as clearly as possible in the clause what falls under a relationship: only existing customers, or also prospects and suppliers? A vague description leads to disputes and makes the clause vulnerable. The more concrete and reasonable the demarcation, the greater the chance that it will hold up.

The judge can moderate a clause

Even a valid non-compete clause can be limited or annulled by the court if it unfairly disadvantages the employee in relation to the employer's interest. A clause that is too broad—in time, geographical area, or scope—runs that risk. A clearly defined, well-substantiated clause is stronger.

Frequently Asked Questions

What is the difference between a non-solicitation clause and a non-compete clause?

A non-compete clause broadly prohibits the employee from competing; a non-solicitation clause only prohibits approaching or working for the employer's business relations. The non-solicitation clause is therefore more limited and interferes less with the freedom of choice of employment.

Is a non-compete clause allowed in a temporary contract?

Only if the employer provides written justification for a compelling business interest. If such justification is lacking, the clause in a fixed-term contract is not valid.

Can I link a fine to a violation?

Yes, a penalty clause is possible, but special legal requirements apply, and the court can reduce a fine. Therefore, have the wording legally reviewed.

Properly drafting a non-compete clause?

Our legal experts draft a non-solicitation or non-compete clause that holds up, or incorporate it into your employment contract. Want to know more? View our employment lawteam or schedule a free consultation.