For years, little changed in the legislation regarding indefinite-term employment contracts, but this now appears to be changing. Minister Van Gennip submitted a bill in March 2024 to reform the legislation regarding non-competition clauses. Research has shown that employers invoke the non-competition clause too often and too easily. By doing so, employers aim to protect their business interests and prevent valuable knowledge or information from ending up with competitors. However, this often unreasonably limits employees in their choice of employment. With the new rules, the government aims to smoothen the transition to a new job for employees. While also protecting the employers’ business interests.
New rules: an overview
The minister has proposed the following changes:
- The non-competition clauses will be legally limited to a maximum duration of 1 year.
- The non-competition clause must be geographically defined; it must be specific and explicitly mentioned in the contract, and substantiated by good reasons.
- The employer must now also motivate the significant importance of a non-competition clause for permanent contracts. This rule already applied to temporary contracts.
- If an employer enforces the non-competition clause upon the employee’s departure, the employer will have to pay the employee a compensation. This will be a legally determined percentage of the employee’s last earned salary for each month that the non-competition clause is enforced. This will ensure that employers think carefully before including and enforcing the non-compete clause.
Income limit
The Tweede Kamer also suggested imposing a limit to the employee’s income. The income limit would ensure that it is no longer possible to include a non-competition clause for employees who earn less than €66,000 gross per year. However, it is yet uncertain whether this rule will indeed be implemented.
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