New Dutch Legislation: The End of Non-compete Clauses?
In June 2023, the Dutch Minister of Social Affairs and Employment, Van Gennip, announced to reform of the non-compete clause. Furthermore, a recent motion has been passed by the House of Representatives under which a minimum salary threshold will apply to enter into a valid non-compete clause.
The Proposed Amendments
In that respect a draft bill will be prepared in which the following is included:
- Limitation of a non-compete clause in duration.
- The non-compete clause must be geographically defined, specific, and justified in the employment contract.
- The employer must motivate the compelling business reasons for entering into a non-compete clause. This obligation currently only applies to employment agreements for a definite period of time but will also apply when entering into an employment contract for an indefinite period of time.
- When holding an employee to a non-compete clause, the employer is in principle required to pay compensation to the relevant employee. The amount of this compensation will be legally determined and based on a percentage of the last-earned salary.
Van Gennip’s letter (in Dutch) regarding those mentioned above can be found here.
Additional Amendment: Salary Threshold
On 13 February 2024, the House of Representatives passed a motion to further restrict the non-compete clause. The content of the amendment: the inclusion of a salary threshold for a valid non-competition clause.
Entering a non-compete clause will not be possible if the employee's income is lower than 1.5 of the average salary, which amounts to a total of EUR 66,000 gross based on full-time employment.
What’s Next?
Minister Van Gennip will submit the proposal for internet consultation during the first quarter of 2024. We will keep you updated!
Questions?
Do you have questions about the non-compete clause in your employment contracts? Get in touch with Jaouad Seghrouchni, Senior Associate, attorney at law, Employment Law & Employee Participation.