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A non-compete clause prohibits an employee from working for a competitor or starting competing activities after the termination of employment. Regulated by law (Art. 7:653 BW): valid only in writing, for employees of legal age, and in the case of contracts for an indefinite period without compelling business interests. A judge may limit untenable clauses in duration and scope. For SMEs: an important but sensitive instrument. Below are the conditions, reasonableness criteria, and enforcement.
The short answer
- Law: Art. 7:653 BW.
- Conditions: in writing, adult employee, significant interests stated in the case of a temporary contract.
- Scope: duration (max 1-2 years) and geographical area (proportional).
- Fine: contractual, often €5,000-€25,000 per violation.
- Judge: may moderate or annul untenable clauses.
What does a non-compete clause prohibit?
Three main categories:
- Employed by a competitor: the employee may not work for specific competitors for X years.
- Own competing activity: starting your own company in the same industry/market.
- Non-compete clause:contact with employer's clients (separate, often combined).
Legal conditions
1. Recorded in writing
In the employment contract or a separate document, signed by both parties. Oral: not valid.
2. Adult employee
Under 18 years of age: no valid non-competition clause possible.
3. In the case of a temporary contract: compelling business interests
Since WWZ 2015: for fixed-term contracts, only valid with written justification of compelling business interests. Vague or standard justification: court annuls.
4. In the event of a substantially changed function: agree again
Promotion or change of position: the old clause may lapse. In the event of a major change: enter into a new clause.
Scope and reasonableness
Duration
- Acceptable: 6 months to 1 year.
- Possible: 1-2 years for key positions.
- Too long: 3+ years — judge reduces.
Geographic area
- Acceptable: region, province or NL.
- Possible: EU for international positions.
- Too broad: worldwide without substantiation.
Sector restriction
- Acceptable: specific industry, niches.
- Too broad: “all business activity” — freedom of labor overburdened.
Fine amount
Contractual:
- Regular employee: €5,000-€25,000 per violation.
- Key position/key person: €25,000-€100,000.
- Senior executive: €100,000-€500,000.
- Plus actual compensation.
The judge may limit untenable fines (Article 6:94 of the Dutch Civil Code).
Judicial moderation
Employee can ask the court to limit or annul the non-competition clause:
- Scope too broad: limit the area or duration.
- Disproportionate severity: destruction.
- Employer's company changes: adjustment.
- Employee better position elsewhere: reimbursement/compensation.
The judge considers the balancing of interests: employee (freedom of work) versus employer (business interest).
Compensation for non-compete clause
Not legally required, but smart: the employer can pay compensation for the period of non-competition. Increases enforceability and reasonableness for the judge. Typically 30-50% of the last salary for the period of the clause.
Petra's practice
Petra sees many non-compete clauses that do not stand up to reasonableness:
- “Employee may not work in the same sector worldwide for 3 years” — unsustainable.
- Correct: “Employee may not work for competitor X, Y, Z in the Netherlands for 1 year, with compensation of 40% of the last monthly salary for that period”.
Petra adapts non-compete clause to specific position — primarily a non-solicitation clause for sales roles, and stricter for management.
Honest recommendation
A non-compete clause is a useful but sensitive instrument. Tailor it to the specific position and business interests. Keep the duration reasonable (max. 1-2 years), geographically focused, and sector-specific. For temporary contracts: justification of compelling business interests is indispensable. Combine with a non-solicitation clause and confidentiality for a complete package. In case of doubt regarding reasonableness: consult a lawyer — this prevents an unusable clause in the event of a dispute.
For other topics: NDA, legal scan of employment contract and employment agreement.
Frequently Asked Questions
Provision prohibiting an employee from working for a competitor or starting a competing activity after the termination of employment. Regulated by law (Art. 7:653 BW): in writing, an adult employee, and in the case of a temporary contract, substantial interests.
6 months to 1 year is acceptable. 1-2 years is possible for key positions. Longer than 2 years: the judge often moderates the penalty. In case of compensation to the employee for the period: the judge is more accepting.
Only with written justification of compelling business interests (since WWZ 2015). Vague or standard justification: judge annuls. For indefinite-term contracts: standard practice allows without additional justification.
Regular employee €5,000–€25,000 per violation. Key position €25,000–€100,000. Senior executive €100,000–€500,000. Plus actual damages. The judge may reduce untenable amounts.
The judge may limit the duration, narrow the scope, restrict sectors, or annul the clause entirely. In the balancing of interests: employee's freedom of labor versus employer's business interest. Clauses that are too broad are often restricted.
Not mandatory but strengthens enforceability. Typically 30-50% of the last month's salary for the period of restriction. Judges view clauses with compensation more favorably — employee less burdened.
A non-compete clause prohibits working for a competitor or one's own company in the same industry. A non-solicitation clause specifically prohibits contact with the employer's clients. Often combined — both together provide complete protection.
