New Dutch legislation: the end of non-compete clauses?

In that respect a draft bill will be prepared in which the following is included:

(1) Limitation of a non-compete clause in duration.

(2) The non-compete clause must be geographically defined, specific and justified in the employment contract.

(3) The employer must motivate the compelling business reasons for entering into a non-compete clause. This obligation currently only applies for employment agreements for a definite period of time but will then also apply when entering into an employment contract for an indefinite period of time.

(4) When holding an employee to a non-compete clause, the employer is in principle required to pay a compensation to the relevant employee. The amount of this compensation will be legally determined and based on a percentage of the last-earned salary.

Van Gennip’s letter (in Dutch) regarding the aforementioned can be found here.

On 13 February 2024, the House of Representatives passed a motion to further restrict the non-compete clause. The content of the amendment: the inclusion of a salary threshold for a valid non-competition clause.

Entering into a non-compete clause will not be possible in the event that the income of the employee is lower than 1.5 the average salary, which amounts to a total of EUR 66,000 gross based on fulltime employment.

Minister Van Gennip will submit the proposal for internet consultation during the first quarter of 2024. We will keep you updated!

Do you have questions about the non-compete clause in your employment contracts? Get in touch with Jaouad Seghrouchni, Senior Associate, attorney at law, Employment Law & Employee Participation.