The new rules regarding the non-competition clause have now been in effect for a year. The main rule is that a non-competition clause may not be included in a fixed-term contract. Nevertheless, the law does offer a way out for employers who still want to agree a non-competition clause with the employee in a fixed-term contract.
Conditions for a non-competition clause in a fixed-term contract
A non-competition clause can be included in a fixed-term contract (with an adult) if it is necessary because of compelling business or service interests. The necessity as well as the interests must be clearly and demonstrably substantiated in writing. Without substantiation, the entire clause is void and, as an employer, you can no longer rely on it.
Necessity of the clause
The court can still annul the non-competition clause with a clear substantiation if the necessity of the clause is lacking or unclear. In the substantiation, it must be clearly addressed which work duties or specific position make the clause necessary. Moreover, this necessity must remain present for the entire duration of the clause and may not lapse halfway.
Substantiation of a compelling business or service interest
It still often happens that the non-competition clause is annulled by the court because the substantiation of the interests is drafted too “vaguely”. Merely describing that the non-competition clause is necessary because a network has been built up, or that the employee works in a sensitive market area, is not sufficient. The preceding examples can indeed constitute a compelling business or service interest if you make them concrete in your substantiation. You do this by, for example, indicating why the market area is so sensitive and what damage could arise if the employee goes to work for the competitor.
Practical examples
By now, we can draw from case law which substantiation is not noted as “vague”.
Gelderland District Court, 9 February 2016
In this case, the employee requests suspension of the non-competition clause, on the grounds that there would be no compelling business or service interests. The employer had clearly substantiated, both in the clause and during the case, that the employee has too much knowledge about customers, prices, suppliers, working methods and know-how, meaning he should remain bound by the non-competition clause. The court ruled in the employer’s favour and rejected the employee’s request.
Utrecht subdistrict court, 19 February 2016
In this case, the employee requests suspension of the non-competition clause, on the grounds that there would be no compelling business or service interests. The employee had worked with a customer management system in which all customer data and all other sales information is stored. The employee had also worked with a national sales team in which a lot of sales information is shared. Furthermore, the employee had gained a great deal of knowledge and experience at the employer and has access to competitively sensitive information. The court states that the clause was justly drawn up and rejects the employee’s request.
Conclusion
The clauses in both cases remained in effect, because the employers had specified and made concrete their substantiations. So, as an employer, be alert when agreeing a non-competition clause, and think carefully about the necessity and the interests of the clause! Also do not forget to clearly describe in the substantiation which business and/or competitively sensitive information is at issue. Without concrete substantiation, the court can still annul the clause, leaving you empty-handed. Note: the court can also annul the clause if, after weighing the interests, it turns out that the clause is unfair to the employee.
Do you need help with the substantiation or assessment of a WWZ-proof non-competition (and/or non-solicitation) clause? Then contact us!
