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Employment law
i Non-competition covenants
In principle, non-competition covenants, including a penalty clause, are permitted and enforceable in the Netherlands. In certain sectors and for certain professions, the use of non-competition covenants in employment contracts is common practice. Under the laws of the Netherlands, a covenant restricting the employee’s right to work in a certain way after the end of the employment agreement is valid only if the employment agreement is entered into for an indefinite period and if the restrictive covenant is agreed on in writing with an adult employee.
A non-competition covenant in an employment agreement for a definite period can be enforced only if it becomes apparent that the non-compete restrictions are necessary on compelling grounds in the interests of a business. These grounds need to be substantiated in writing at the time the covenant is agreed. Furthermore, employers may not derive any rights from non-competition clauses if an employment agreement’s ending is a consequence of culpable behaviour of the employer. Non-competition covenants must be reasonably limited in terms of a time frame and territory.
Although the laws of the Netherlands regulate only non-competition clauses, it is commonly understood that contractual restrictions on non-solicitation (of business relations) fall within the scope of its legislation.
ii Ancillary activities clauses
Until 1 August 2022, ancillary activities clauses were...
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