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Published on 27 June 2024, written by Hajar Marcouch

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On 4 March 2024, a draft bill “modernization of the non-compete clause” went into internet consultation.  This draft bill aims to limit (the improper use of) the non-compete clause and set additional conditions for the applicability of the non-compete clause to strengthen the legal status of the employee.

The draft bill contains the following important measures:

1. A non-compete clause may not be agreed for a period longer than 12 months (after termination).
   If a longer duration is agreed, the non-compete clause is null and void.
2. The non-compete clause must include a specific geographical scope.
   It is possible to include a limited scope, but it is also possible to indicate that the scope is on a national or even global level.
3. The substantial business interests should be justified in writing and regardless whether the employment contract is for a fixed (already required) or indefinite period (new requirement).
   This justification should be specific to the employee and the position concerned. A general overview of business interests is not sufficient. If a non-compete clause is not motivated in more detail, then the entire clause is null and void.
4. The employer must invoke the non-compete clause in writing and in a timely manner.
   The employer informs the employee in a timely manner in writing (no later than one month before the end of the employment contract) whether the employer invokes the non-compete clause and for which period.
5. If the employer invokes the non-compete clause, the employer is obliged to compensate  the employee.
   The compensation amounts to at least 50% of the last monthly salary earned for each month the non-compete clause is in effect. The compensation must be paid as a lump sum on the last day of employment or within 15 days after given notice or dissolution (by the court). If the employer does not pay the compensation or pays it too late, the non-compete clause will lapse. The definition of wages will be aligned with the system used to calculate the transitional compensation. The salary will therefore be increased with fixed agreed wage components, such as holiday allowance, a fixed thirteenth basket, a structural overtime allowance and a fixed shift bonus. Please note that the compensation is no longer due if the employee fails to comply with the clause. If the compensation has already been paid, then it is an undue payment from the moment the employee violates the clause.

These new conditions will also apply to relationship clauses. One can comment on the draft bill until April 15, 2024. We will keep you informed about further developments on this topic.

This TOPIC has been written by Hajar Marcouch – Advocaat bij Doorn en Keizer (denklaw.nl), h.marcouch@denklaw.nl. For further information or questions on this topic or any other employment law topic, please feel free to contact us.