Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Keeping competitive advantage

by Personnel Today 13 Nov 2001
by Personnel Today 13 Nov 2001

Non-competition restrictions in the Netherlands protect employers from
losing clients and information to former employees. Here, Martin Beijneveld,
partner at Dutch law firm Van Harmelen & Beijneveld, explains how to make
sure firms stay within the rules

Under Dutch employment law, an employer has several ways to restrict an
employee during and after termination of the employment agreement.

Parties can agree upon a confidentiality provision, a prohibition on outside
interests during the employment, and a post-termination non-competition clause.
This is specifically dealt with in The Netherlands’ Civil Code.

Non-competition clause

A non-competition clause is a stipulation between the employer and employee
where the employee is restricted in his ability to accept other employment
after his contract of employment has come to an end. Non-competition
restrictions aim to protect the employer from any infringement by the former
employee of the empl-oyer’s economic interests, such as know-how.

A non-competition clause will be deemed void if there is no written
agreement. It can be agreed upon at any time, even at the end of the employment
agreement. If an employment agreement for a fixed period of time is extended or
if there is a business transfer, a new non-competition clause does not have to
agreed.

Types of non-competition restrictions

Various types of non-competition restrictions may be included in an
employment agreement. They respectively prohibit the employee from competing,
contacting or having business dealings with customers and interfering with
supplies of services to the employer.

Non-competition restrictions must be no wider than is necessary to protect
the employer in terms of duration, territory and sphere of activity. The
employer must consider the employee’s position and the protections it requires
carefully. It should think about the geographical restriction in which it would
require protection. The narrower this is, the more likely it is that the clause
would be upheld.

The duration of restriction that is regarded as reasonable will depend upon
factors such as the employer’s marketplace and the extent of the employee’s
influence. In general, a limit of one year is usually regarded as acceptable.

To make these clauses reasonable and enforceable, they must be tailored to
the circumstances. In general, the paramount source of obligations between
parties to a contract is the contract itself.

"The contract itself" means not only the express terms of that
contract, but also terms implied into it. If the agreement of the parties is
not complete, the contents of the contract must be supplemented by the rules of
law, usage and reasonabless and fairness.

Under The Netherlands’ Civil Code the development of rules and principles
for the interpretation of contracts is left completely to the courts.

How the courts approach restrictive covenants

Case law shows that if a non-competition clause is drawn up too vaguely, the
courts interpret the clause in favour of the employee. The courts have the
power to limit the scope of a non-competition clause or to set it aside
altogether regardless of whether it is legally valid. This power may be
exercised if the employer has no business interest in enforcing the non-competition
clause or if the employer’s interest in enforcing it carries less weight than
the employee’s in having it limited in scope or set aside.

The courts will also include in their consideration the investments made by
the employer in the training and professional competence of the employee, the
duration of the employment, the employee’s salary, labour market opportunities
of the employee and the circumstances under which the employment agreement has
been terminated.

In weighing up the interests, it will be in the employer’s favour if it has
offered a payment during the length of the non-competition clause. The courts
have the power to order the employer to pay the employee compensation for the
duration of the period in which he wishes to enforce the non-competition
clause.

The employer cannot derive any rights from the non-competition clause if he
has terminated the employee’s employment in an irregular manner – that is
without having given notice or without due observance of the provisions
applicable to termination. The concept of a contractual payment in lieu of
notice, which in the UK would permit an immediate and lawful termination, is
unknown under The Netherlands’ Civil Code. A payment in lieu of notice clause
is null and void.

Finally, if the employment agreement undergoes considerable changes, the
non-competition clause will not stand. The employer and employee will have to
agree a new non-competition clause.

Remedies if the ex-employee is in breach of the non-competition
restriction

What remedies are available if the ex-employee is in breach the
non-competition provisions? In all matters in which an immediate injunction,
measure or decision is required, the parties to the non-competition provision
may apply to the court. The decision of the court is provisional in the sense
that it does not prejudice the rights of parties in main proceedings that are
pending or that are initiated after the court’s judgement. In the main
proceedings, the employer can claim damages.

In order to avoid any dispute on the amount of damages, it is advisable for
the employer to include a penalty provision in the employment agreement,
specifying the amount of money payable by the employee in the event of a breach
of the provisions after termination. This constitutes both an incentive to
perform and a means of determining in advance the amount of compensation
payable.

If the employer chooses to invoke the penalty clause, it cannot claim the
actual amount of losses arising from the breach, but instead the amount
specifically agreed in advance. Again, to ensure that the penalty provision is
enforceable, it must be tailored to the particular circumstances as far as
possible. Courts can modify a penalty provision at the request of the employee
if it is obviously required to achieve fairness.

Conclusion

The non-competition provision is an effective instrument for the employer to
protect its interests and is even more effective when linked to a penalty
provision, which is a strong incentive to perform the restrictive covenant.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

Employers with employees in The Netherlands should not underestimate the
value of a well-drafted, non-competition covenant since the enforceability of
this is likely to be upheld in court and thus provide important protection for
the interests of the employer.

Edited by Clare Murray, employment law partner at Fox Williams and editor
of Fox Williams’ online employment law information service www.hrlaw.co.uk

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Staff look to strike as Post Office won’t reinstate workers
next post
Staff anger over share hijack

You may also like

Dallas Cowboy Cheerleaders receive 400% pay rise

4 Jul 2025

FCA to extend misconduct rules beyond banks

2 Jul 2025

‘Decisive action’ needed to boost workers’ pensions

2 Jul 2025

Business leaders’ drop in confidence impacts headcount

2 Jul 2025

Why we need to rethink soft skills in...

1 Jul 2025

Five misconceptions about hiring refugees

20 Jun 2025

Forward features list 2025 – submitting content to...

23 Nov 2024

Features list 2021 – submitting content to Personnel...

1 Sep 2020

Large firms have no plans to bring all...

26 Aug 2020

A typical work-from-home lunch: crisps

24 Aug 2020

  • Empower and engage for the future: A revolution in talent development (webinar) WEBINAR | As organisations strive...Read more
  • Empowering working parents and productivity during the summer holidays SPONSORED | Businesses play a...Read more
  • AI is here. Your workforce should be ready. SPONSORED | From content creation...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+