Bill to modernize competition clause

Source: Kerckhoffs Advocaten Maastricht written by: mr. Linda Hamid

It has been almost two weeks since the Bill on modernization of non-competition clauses was opened for internet consultation. The proposal relates to various amendments to Section 7:653 of the Dutch Civil Code, the article of law concerning the non-competition clause. Broadly speaking, the following amendments are proposed:

1. A non-competition clause with a duration of more than 12 months will be null and void. The maximum duration will therefore be 12 months.
2. It becomes mandatory to state the area or radius to which the non-competition clause applies (geographical scope).
3. Every non-competition clause must be accompanied by a statement of reasons. Currently, this is only mandatory for non-competition clauses in fixed-term employment contracts, but the bill extends this to indefinite-term employment contracts as well.
4. There will be a mandatory compensation for the employee if the competition clause is invoked by the employer. This amounts to 50% of the monthly salary for each month in which the employer wishes to hold the employee to the clause.
5. No later than one month before the termination of the employment contract, the employer shall inform the employee whether it intends to hold the employee to the non-competition clause, and for what duration.

When concluding a termination agreement, some of these obligations may be waived, but the maximum duration of 12 months and the obligation to state reasons will always remain in place.

Currently, as mentioned, the bill is open for Internet consultation, which means that anyone may respond to the proposal. After that, the bill can be considered in the House of Representatives.