Non-Compete Clause in the Netherlands (Concurrentiebeding)

A non-compete clause (concurrentiebeding) can significantly restrict your career options after leaving your employer. Many employees in the Netherlands are bound by such a clause without fully understanding its implications. In this article, we explain when a non-compete clause is valid, what conditions must be met, how you can challenge it, and what role it plays in a settlement agreement.

What is a non-compete clause?

A non-compete clause (concurrentiebeding) is a provision in your employment contract that restricts your ability to work for a competing employer or to start a competing business after the end of your employment. The legal basis for the non-compete clause is found in Article 7:653 of the Dutch Civil Code (BW).

The purpose of a non-compete clause is to protect the employer's legitimate business interests, such as trade secrets, customer relationships, and specific knowledge. However, a non-compete clause also restricts your fundamental right to freely choose your employment. This tension between the employer's interests and your freedom of employment is at the heart of the legal framework surrounding non-compete clauses in the Netherlands.

Non-compete clauses are extremely common in Dutch employment contracts. Many employers include them as standard, even when the employee does not have access to sensitive business information. This practice has led to increasing criticism, as overly broad non-compete clauses can unnecessarily restrict employee mobility. As a result, there have been discussions in the Dutch Parliament about reforming the rules, but as of now, the current framework under Article 7:653 BW remains in force.

A typical non-compete clause contains several elements: a prohibition on working for competitors, a geographic scope (such as a radius around the employer's location or the entire Netherlands), a duration (usually one to two years after the end of employment), and a penalty clause for violation. Some clauses are very broadly formulated and may even prohibit you from working in a related industry altogether.

Validity requirements

For a non-compete clause to be legally valid, several conditions must be met. These requirements are set out in Article 7:653 BW:

Written agreement

The non-compete clause must be agreed in writing. This means it must be included in the employment contract (or a separate document) that you have signed. A verbal non-compete agreement is not legally enforceable. In practice, the clause is usually included in the employment contract itself or in an addendum that you sign when starting or during your employment.

Adult employee

The employee must be an adult (18 years or older) at the time of entering into the agreement. A non-compete clause agreed with a minor employee is null and void. This protects young workers from being bound by restrictive clauses that they may not fully understand.

Permanent contract (vast contract)

Since 1 January 2015, a non-compete clause in a permanent employment contract does not require any specific justification from the employer. The clause is valid if it meets the two basic requirements above: written form and adult employee.

However, this does not mean that every non-compete clause in a permanent contract is automatically enforceable. The clause can still be challenged in court if it unreasonably restricts you, as we discuss further below.

Clear and specific formulation

While not an explicit statutory requirement, case law has established that a non-compete clause should be sufficiently clear and specific. An extremely vague or overly broad clause may be more easily challenged in court. The clause should specify what activities are prohibited, the geographic scope, and the duration of the restriction.

Non-compete clause in temporary contracts

Since 1 January 2015, the rules for non-compete clauses in temporary (fixed-term) contracts are significantly stricter. Under Article 7:653 paragraph 2 BW, a non-compete clause in a temporary contract is only valid if the employer has provided a written motivation explaining why the clause is necessary to protect the employer's substantial business or service interests (zwaarwegende bedrijfs- of dienstbelangen).

This motivation must be included in the clause itself or in a document that is directly connected to the clause. A general statement that the employer "has important interests" is not sufficient. The motivation must be specific and explain which concrete interests justify the restriction of the employee's freedom of employment.

If the employer has not provided such a motivation, the non-compete clause is null and void from the start. You are not bound by it and can freely move to a competitor after the end of your temporary contract. This is an important protection: since a temporary contract already limits the duration of your employment, the legislator considered it unfair to also restrict your career options afterwards without strong justification.

Even if the employer has provided a motivation, you can still challenge it. If the court finds that the stated interests do not constitute "substantial" interests, or that the restriction is disproportionate given the circumstances, the clause can be partially or fully nullified.

Non-solicitation clause (relatiebeding)

A non-solicitation clause (relatiebeding) is a specific type of restrictive covenant that prohibits you from contacting or doing business with clients, suppliers, or other business relationships of your former employer after the end of your employment. It is less restrictive than a full non-compete clause because it does not prohibit you from working for a competitor as such — it only restricts your contact with specific relationships.

Despite this seemingly narrower scope, Dutch courts have ruled that a non-solicitation clause can effectively function as a non-compete clause if it is so broadly formulated that it prevents you from performing your work in practice. For example, if you work in a niche market and the non-solicitation clause covers almost all potential clients, it may be treated as a non-compete clause and subjected to the same stricter requirements.

The legal requirements for a non-solicitation clause are the same as for a non-compete clause: it must be agreed in writing, the employee must be an adult, and in temporary contracts, a written motivation is required. The same possibilities for judicial review apply.

In practice, many employment contracts contain both a non-compete clause and a non-solicitation clause, sometimes alongside a confidentiality clause (geheimhoudingsbeding). Each of these clauses has its own scope and consequences, and it is important to understand how they interact.

Scope and limitations

The scope of a non-compete clause depends on its specific wording. Key elements that define the scope include:

• Activities: Which activities or positions are prohibited? A clause might prohibit working for any "competing business" or be more specific about particular roles or activities.
• Geographic area: Many clauses specify a geographic restriction, such as "within a 50-kilometre radius" or "within the Netherlands." Some clauses have no geographic limitation, which may make them more vulnerable to judicial review.
• Duration: The clause must specify how long the restriction lasts after the end of employment. Common durations are one to two years. There is no statutory maximum, but an excessively long duration can be reduced by a court.
• Penalty: Most non-compete clauses include a penalty clause (boetebeding) specifying the financial consequences of violation, often a fixed amount per violation plus an additional amount per day of continued violation.

It is important to note that a non-compete clause only applies after the employment has ended. During the employment, you are already bound by a general duty of loyalty (good employeeship under Article 7:611 BW) that prevents you from competing with your employer.

Challenging a non-compete clause

Even if your non-compete clause meets all formal validity requirements, you can challenge it in court. Article 7:653 paragraph 3 BW gives the court the power to partially or fully nullify a non-compete clause if the employee is "unreasonably restricted" by the clause in proportion to the employer's interest in maintaining it.

When deciding whether to nullify or limit a non-compete clause, the court weighs the following factors:

• Your interest: How much does the clause restrict your career opportunities? Will you be unable to find comparable work? Will it result in a significant loss of income?
• Employer's interest: Does the employer have a genuine interest in the restriction? What specific knowledge, trade secrets, or customer relationships are at stake?
• Proportionality: Is the scope (duration, geographic area, activities) proportionate to the employer's interests? Could a more limited restriction sufficiently protect the employer?
• Circumstances of the termination: Who took the initiative for the termination? If the employer dismissed you, the case for maintaining the non-compete clause is generally weaker.
• Time elapsed: The longer the time since the end of employment, the weaker the employer's interest becomes, as knowledge and relationships become less current.

You can challenge the clause either before or after the end of your employment. If you need immediate clarity (for instance, because you have a job offer from a competitor), you can request an interim injunction (kort geding) from the court. The court can then provide a provisional ruling within a few weeks.

Non-compete clause in a settlement agreement

When your employment ends through a settlement agreement, the non-compete clause is one of the most important points to negotiate. By default, the non-compete clause from your employment contract remains in force after the employment ends, even if you leave by mutual consent through a settlement agreement.

However, in a settlement agreement, you can negotiate that the non-compete clause is:

• Fully lifted: The clause is entirely removed, and you are free to work for any employer or start any business.
• Partially lifted: The scope, duration, or geographic area of the clause is reduced. For example, the clause may be limited to specific named competitors, or the duration may be shortened from two years to six months.
• Modified: The clause may be converted into a non-solicitation clause (relatiebeding) that only prohibits you from contacting specific clients, which is less restrictive.

Lifting or modifying the non-compete clause should be a standard negotiation point in any settlement agreement discussion. If the employer is the one who wants to end the employment, you generally have a stronger position to negotiate the removal of the clause. After all, it would be unfair if the employer both terminates your employment and restricts your ability to find new work.

Consequences of violation

If you violate a non-compete clause, the consequences can be significant. Most non-compete clauses contain a penalty clause (boetebeding) that specifies the financial consequences. A typical penalty clause includes:

• A fixed penalty for each violation (for example, EUR 10,000 per violation).
• An additional daily penalty for every day the violation continues (for example, EUR 500 per day).

In addition to or instead of the penalty, the employer can also claim actual damages if they can demonstrate that they suffered losses due to your breach. However, the employer must choose between the contractual penalty and actual damages under Article 6:92 paragraph 2 BW — they cannot claim both for the same violation.

The employer can also seek an injunction (kort geding) to force you to immediately stop the competing activities. If the court grants the injunction, you must comply immediately, often under penalty of additional daily fines.

It is important to realise that the contractual penalties can accumulate very quickly. A daily penalty of EUR 500 amounts to EUR 15,000 per month. However, you can ask the court to reduce (matigen) disproportionately high penalties under Article 6:94 BW. Courts regularly do this when the penalty is clearly excessive compared to the actual damage suffered by the employer.

Judicial review

The Dutch court system provides several possibilities for judicial review of non-compete clauses. Understanding these options is important if you are considering taking legal action:

Interim injunction (kort geding)

If you need a quick decision (for example, because you have an urgent job offer), you can request an interim injunction from the subdistrict court. In a kort geding, the court can provisionally suspend or limit the non-compete clause. The procedure is relatively fast (usually a few weeks) and provides immediate relief. However, it is a provisional ruling, and the matter can still be decided differently in main proceedings.

Main proceedings (bodemprocedure)

In main proceedings, the court makes a final decision about the validity and scope of the non-compete clause. This procedure takes longer (several months) but provides legal certainty. The court can fully or partially nullify the clause under Article 7:653 paragraph 3 BW.

Compensation for the employer's maintenance of the clause

Under Article 7:653 paragraph 5 BW, the court can order the employer to pay you compensation for the period during which the non-compete clause restricts you. This comes into play when the court finds that the clause is valid but recognises that it significantly limits your career options. The compensation is intended to offset the financial disadvantage you suffer.

In practice, many disputes about non-compete clauses are resolved in interim proceedings, often leading to a compromise: the clause is limited in scope or duration, or the employee is permitted to take the specific position at issue while other competing activities remain prohibited.

Frequently asked questions about non-compete clauses

Is a non-compete clause always valid?

No. A non-compete clause must meet specific requirements: it must be in writing, the employee must be an adult, and in a temporary contract, the employer must provide a written motivation explaining why the clause is necessary. Even if these requirements are met, the clause can be challenged in court if it unreasonably restricts you.

Does a non-compete clause survive a settlement agreement?

Yes, unless the settlement agreement explicitly states that the clause is lifted or modified. If the settlement agreement is silent on the non-compete clause, it remains in full force. Always ensure that the clause is addressed in the agreement.

Can I work for a competitor if I was dismissed?

The non-compete clause remains in force even after dismissal, unless a court has nullified it or you have agreed otherwise in a settlement agreement. However, if your employer took the initiative for the dismissal, your chances of successfully challenging the clause in court are generally stronger, because it would be disproportionate for the employer to both terminate your employment and restrict your next career move.

What if my non-compete clause has no geographic or time limit?

A non-compete clause without a specified duration or geographic scope is not automatically invalid, but it is more vulnerable to judicial review. Courts will consider the lack of limitations as a factor when assessing whether the clause unreasonably restricts you. In practice, such broad clauses are often limited or nullified by courts.

Can I be bound by a non-compete clause in a temporary contract?

Only if the employer has provided a written motivation in the clause itself, explaining why the clause is necessary to protect substantial business interests. Without this motivation, the clause is null and void. Many employers fail to provide adequate motivation, making the clause unenforceable.

What should I do if I want to move to a competitor?

First, review the exact wording of your non-compete clause. Then consider whether the clause is valid and whether there are grounds to challenge it. You can negotiate the removal of the clause in a settlement agreement, request a provisional ruling from the court (kort geding), or seek legal advice about your specific situation. Contact us for a free assessment.