The importance of a non-competition clause
It can be very important for an employer to include a non-competition clause when entering into the employment contract, in order to prevent the employee from working for a competitor after the end of the employment contract. The employer can also bind an employee to him by including a non-competition clause, because the employee is restricted in his choice of other employers, which means that he will remain with the employer sooner.
Requirements for a non-competition clause
Because a non-competition clause can be a major restriction for employees, there are requirements that a non-competition clause must meet. A non-competition clause must be in writing, an employee must know what the obligation resulting from signing a non-competition clause entails, he or she must be given sufficient time to go through the employment contract in which the non-competition clause is included, the employee must be of age, it must be an employment contract for an indefinite period of time (or there must be a substantial business interest as a result of which a non-competition clause is nevertheless laid down in a fixed-term employment contract).
Maximum duration and geographical scope of a non-competition clause
Despite the fact that, from a legal point of view, there is no maximum duration attached to a non-competition clause, it is important for the employer to think carefully and critically about the duration of the non-competition clause. After all, a judge can rule that the non-competition clause is unreasonable because it is too broad. Current case law generally does not accept a non-competition clause for a term of more than one year.
The same applies to the geographical scope of a non-competition clause. In principle, there are no restrictions on this, but the court may decide that the scope is unreasonable. It follows from current case law that the geographical scope of a non-competition clause must be related to the area in which the organisation is active.
The fact is that drawing up a non-competition clause requires customisation. Certainly when determining its duration and geographical scope. We therefore recommend that you seek advice from a specialist lawyer.
Re-agreement of a non-competition clause
In a number of cases, the employee and employer must re-enter into the non-competition clause. This involves a change in the position of the employee, an expansion of the employee's activities or other changes within the organisation, as a result of which the non-competition clause weighs more heavily on the employee. The non-competition clause must also be reinstated when the employment contract is renewed. Again, because a non-competition clause can weigh heavily on the employee's freedom to choose another employer upon termination of the employment contract.
Content of a non-competition clause
A non-competition clause often specifies for which territory the clause is valid, which sector or specific activities are covered by the non-competition clause, but also whether a fine, and how high it will be, is linked to non-compliance with the non-competition clause.
A non-competition clause may lose its effect
The judge has the possibility to annul a non-competition clause if he or she considers that the interest of the employer is disproportionate to the interest of the employee. It is therefore important that the interests of both parties are always weighed up when drawing up a non-competition clause. In addition to the annulment of a non-competition clause by the court, a non-competition clause may also lose its effect if the employment contract ends as a result of an incident that causes the employer to be liable for damages. A change of circumstances as a result of which the non-competition clause weighs more heavily on the employee may also be a reason for a non-competition clause to lose its effect.
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Do you have questions about the non-competition clause in your employment contract? Or are you an employer and wondering how best to include a non-competition clause in your employment contract? At Legal Q you have come to the right place! Contact us and we will see what we can do for you.