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

Employment, Employee Participation & Mediation

3 July 2023

Written by

Jaouad Seghrouchni

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Recently, Dutch Minister of Social Affairs and Employment, Van Gennip, announced to reform the non-compete clause. The aim of such reform is to prevent unnecessary use of the non-compete clause limiting the labour mobility.

The proposed amendments

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

  • Limitation of a non-compete clause in duration
  • The non-compete clause must be geographically defined, specific and justified in the employment contract.
  • 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.
  • 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.

Minister van Gennip will submit the proposal for internet consultation by the end of 2023. Van Gennip's letter (in Dutch) regarding the aforementioned can be found here

Questions?

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