Since 1 January 2015 fixed-term employment contracts may, in principle, no longer include a non-competition clause. Strict requirements apply if the parties wish to do so nevertheless. The employer must be able to demonstrate that it has a compelling business interest in including the non-competition clause in the employment contract. In that contract, preferably in the text of the actual non-competition clause, the employer must (i) state what compelling interest is involved; and (ii) substantiate why the non-competition clause must be included in order to protect that interest. The interest and the substantiation must be related to and directed at the specific work or position for which the employee is to be hired.
Substantiation insufficiently specific
A recent judgment of the Amsterdam subdistrict court judge has shown that this is not that easy. An employee had terminated his fixed-term employment contract and wished to enter the employment of a competitor of his former employer, in breach of the non-competition clause in the employment contract. His former employer wished to hold him to the clause, after which the employee instituted preliminary relief proceedings requesting that the non-competition clause be lifted. The employer had first of all referred in the text of the non-competition clause to all the time and money that it spent on training its employees, particularly for the position in question. The judge wondered whether the employer could not just as easily have protected that interest by means of a study costs clause or confidentiality clause, and found that the employer had insufficiently substantiated why it considered a non-competition clause necessary. The employer had furthermore stated that the employee’s job meant that he would be provided with information on the network established by the employer, the market segment and its needs and method of operation. The judge found that description insufficiently specific because it had not been stated what specific knowledge or confidential business information with which the employee would be provided made it necessary to agree on a non-competition clause. The employer had therefore not met its obligation to state its reasons; the non-competition clause was therefore lifted.
Weighing of interests
A non-competition clause must usually also meet a third requirement: briefly stated, the employer’s interest must outweigh the employee’s interest in a free choice of employment. The judge not only found that the non-competition clause did not meet the first two requirements, but also stated in his judgment that the weighing of interests in this case also worked out in the employee’s favour. During his employment at the employer the employee had worked for only one customer, had taken two courses and had in fact not performed very job-specific work. Moreover, the work at the competitor was more in keeping with his work experience and his salary there was higher.
This judgment confirms that employers should draw up non-competition clauses in fixed-term contracts with great care. The interests involved must be specifically identified. It is unlikely that judges will apply the new rules more leniently in the future.