Minister Van Gennip of Social Affairs and Employment has, in a room letter outlined the policy options for reforming the rules on non-competition clauses.
Employees have limited choice
Research shows that more than 3 million employees have a non-competition clause in their employment contract. Currently, 37% of employees state that they have a non-competition clause, whereas in 2015 this was the case for 19% of employees. Too many people are restricted in their choice of employment by a non-competition clause. This can limit the necessary labour mobility.
Employers
The fact that non-competition clauses are so restrictive is also down to employers. They often opt for a strict regime when drafting such clauses: an unreasonably long term, extremely high penalties for breach, and so on. Furthermore, companies often copy standard clauses from the internet, which means that in many cases it is unclear why the employment contract contains a non-competition clause and why it applies in a specific situation. Consequently, non-competition clauses often do not stand up in court, or at least not in full.
Policy options
The Minister outlines four policy options. Van Gennip will hold further consultations with the social partners in the spring of 2022, and the next steps are to be taken in the summer of 2022.
Policy option 1
- limit the maximum duration to 1 year
- requirement to specify and justify the geographical scope in the clause
- Non-competition clause lapses in the event of bankruptcy
- A non-competition clause lapses upon dismissal during the probationary period
- The non-competition clause may only be invoked if the employee resigns of their own accord
- Conditions regarding the employer’s notification of their intention to invoke or not invoke the clause following the end of the employment contract
Policy Option 2
- all elements of policy option 1
- Mandatory payment terms: payment upon invocation of the clause and payment upon conclusion of the clause (signing fee) – optional
Policy Option 3
- all elements of policy option 1
- Restriction on non-competition clauses only where there is a compelling business interest; the employer must provide reasons when entering into such a clause. In accordance with the current situation regarding fixed-term employment contracts
Policy Option 4
- all elements of policy option 1
- compulsory reimbursement under policy option 2
- Restriction on non-competition clauses only where there is a compelling business interest – Policy Option 3