What should you take into account in the case of a non-competition clause?
What should you take into account briefly in the case of a non-competition clause?
The rules for a temporary employment contract have changed with the introduction of the WVZ in 2015. It is still necessary to agree on the non-competition clause in writing, but Article 7: 653 sub 2 of the Dutch Civil Code stipulates that a non-compete clause in a written employment contract is only valid if the need for such a clause is properly justified. It must be clear from this statement of reasons that the non-competition clause is necessary due to serious employer’s or company’s interests. It must clearly follow why it is important for the employer that the employee with this temporarily contract must be bound by the non-competition clause. This justification must include more than the general statement that the employee will have access to and access to confidential or sensitive company information.
In every temporary employment contract, the employer must therefore provide a good explanation of why a competition clause must apply precisely to this employee. The specific activities and function of the employee play a role, but also the company information and know-how available to the employee. The employer must also clearly state which negative consequences are likely to arise for the employer if the employee were not bound by the non-competition clause. If the written contract for a definite period of time does not contain proper written reasons, the non-competition clause is not valid. The employee can then still work for the competitor. So:
- An employer who wants to prevent an employee with a temporary contract from switching to the competitor after the end of the contract must be able to properly explain and describe this in the employment contract.
- An employee with a temporary contract should investigate whether the clause is actually valid.
Furthermore, the law does not know the distinction as a non-competition clause or relationship clause, so the above also applies to a “relationship clause”.
In addition, a non-competition clause is often not formulated very clearly. Bear in mind that the court will then almost always explain the clause to the disadvantage of the employer. Furthermore, be clear about the nature of the prohibited activities, the time and the geographic scope.
If the employment contract has been changed considerably, for example due to a promotion, it is always wise to re-evaluate the description of the non-competition clause. If the non-competition clause has “increased in weightiness” for the employee as a result of the change in the employment contract, it may no longer be valid. A new non-competition clause must then be agreed.
Some recent case law:
On 6 February 2019, the Utrecht District Court ruled that the employer had not complied with the serious motivation requirement that applies to a temporary employment contract. The former employer in the meantime demanded € 400,000 in fines from her previous employee!
The court states that the legislator’s point of departure for a temporary contract is that a non-competition clause is not permitted, unless the employee is employed in a specific position and then a specific assessment and justification must follow. That was not the case here, according to the subdistrict court judge. The statement of reasons is too general and could apply to many employers and employees according to the court.
Again on 6 February 2019 at the Utrecht court, it is about an employee with a permanent employment contract with a non-competition clause who works at a company that sells fitness equipment. The subdistrict court judge states that although employees are employed by a competitor, recourse to the non-competition clause is only justified if there is actually a justified fear of competition. According to the subdistrict court judge, the mere fact that an employee joins a competitor does not automatically lead to competition. According to the subdistrict court judge, this requires that employees, with the help of knowledge obtained from their previous employer, compete with that previous employer. According to the subdistrict court judge this was proved insufficient and he therefore rejects the employer’s claim.
In a final competition clause case in Utrecht, the court ruled on 6 February 2019 that an employer had no or insufficient interest in the competition clause. This was an ex-trainee who had only recently been employed, had barely completed his internal training, had never been seconded and it is unlikely that he had company-sensitive information. The court also considered the importance of free labor choice. His former employer demanded an injunction to work for the competitor and an advance of € 66,000 in fines in summary proceedings, but the court therefore rejected that.
What does this teach us: a non-competition clause is tailor-made and the employer must carefully consider whether he has an interest in a non-competition clause. The judge is critical and if a clause does not serve the employer’s real interests, the judge can put it aside.
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