Motivate competition clause in fixed-term employment contract!

Unemployment continues to decline, workers are changing jobs more frequently. Employers are therefore trying to bind employees to themselves by, for example, including a non-competition clause in the employment contract. The definition as included in the law: "A clause between the employer and the employee restricting the latter's authority to work in a certain way after the end of the contract." Since the introduction of the WWZ, it is in principle not permitted to include a non-competition clause in a fixed-term employment contract. This is only possible if there are compelling business or service interests and if these interests are substantiated in writing. Various judgments have shown the importance of clearly stating the reasons for a non-competition clause in a fixed-term employment contract.

Case study

The District Court of North Holland rules on the non-competition clause of an employee on a temporary contract who, together with a colleague, starts a business in the same industry in which the employer operates. The employee argued that the clause did not meet the requirements of the law. The Subdistrict Court considered that both the weighty business or service interests and the reason for the interest were sufficiently motivated by the employer. Thus, the knowledge that the employee gained during his employment has been sufficiently addressed, it has been established that during his employment the employee had contact with customers and came into contact with confidential information. The employee, together with his future partner, forms the heart of the organization. Also considering that the employee has no other work experience in the industry, the Cantonal Court concluded that the employer trained the employee for the position. Since the employee would not be unfairly disadvantaged by enforcement of the non-competition clause, he should not violate the clause. Location: ECLI:NL:RBNHO:2017:10006.

Competition clause nullified

In another case, the East Brabant District Court once again addressed the question of whether a legally valid non-competition clause applied. The employee's fixed-term contract was extended under the same conditions. That this refers to an "extension" is irrelevant, according to the District Court; given that this took place after January 1, 2015, it concerns a new fixed-term contract. A legally valid non-competition clause is therefore subject to the requirement that the written motivation of the employer must be included when a non-competition clause is included. Such a justification is lacking in the present employment contract. The Subdistrict Court concluded that no legally valid non-competition clause had been agreed in the new employment contract. The parties subsequently agreed on a third employment contract, for an indefinite period of time, also referring to an amendment to the existing employment contract. For the time being, the Subdistrict Court ruled that the third employment contract, concluded between the parties for an indefinite period of time, was also not subject to a legally valid non-competition clause, since no written non-competition clause had been included in that employment contract either. The Subdistrict Court concludes that the non-competition clause is null and void. The employee is permitted to enter the service of another employer or to start his own business. Location: ECLI:NL:RBOBR:2017:6797.

The above shows that careful wording of a non-competition clause must be included in a fixed-term contract if the clause is to be enforced.

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