News item | 02-06-2023 | 3:00 PM
Employees are increasingly bound by a non-competition clause. This means that, after the end of their contract, they are not allowed to do the same type of work at a competing company. This restrictive rule is there to protect the business interests of employers. But that restriction is often not justified, according to research. This makes it less easy for employees to change jobs and employers less easily find people. The cabinet has therefore decided to modernize the non-competition clause.
Minister van Gennip of Social Affairs and Employment: “A non-competition clause may be necessary to protect trade secrets or business relationships, for example. But we now see that contracts increasingly contain a non-competition clause as standard, while there is no good reason for this. This is unnecessarily restrictive for employees and hinders the advancement in the labor market. That is why we are going to reform the rules for the non-competition clause.”
More clarity
The government wants it to become clearer in advance when a non-competition clause can be included and invoked by an employer. This also prevents going to court. That is why Minister Van Gennip intends to elaborate the following changes in a bill:
- The non-competition clause is legally limited in duration;
- The non-competition clause must be geographically delineated, specific and motivated in the contract;
- In permanent contracts, the employer must justify the weighty business interest of a non-competition clause (this already applies to temporary contracts);
- If an employer holds a departing employee to the non-competition clause, the employer must pay compensation to the employee. This will be a legally determined percentage of the most recently earned salary. Such compensation ensures that employers think carefully before they include and invoke the non-competition clause.
Research
Research by research agency Panteia shows that one in three employers uses a non-competition clause, almost always as a standard clause in the contract. There is not always a good reason for this, for example because the employee does not have access to relationships or sensitive information. In the meantime, it can have a deterrent effect, so that employees do not dare to transfer to another employer. It is estimated that 3.1 million employees are bound by a non-competition clause. The bill to improve this situation is expected to enter internet consultation at the end of 2023.