Improper use of non-competition clauses is common. What now?

The non-competition clause in employment contracts is not undisputed, both D66 and the PvdA favour curtailment, the FNV trade union even wants to get rid of it completely. In an article by NRC, Ruben Houweling, professor of employment law at Erasmus School of Law, offers a legal context to the discussion about the improper use of these non-competition clauses.

Research by the Ministry of Social Affairs and Employment shows that at least one in five salaried employees has a non-competition clause in their contract. However, only a relatively small group of top executives in organizations actually have access to sensitive company information. This situation compares poorly with the right to free choice of labour in the constitution, according to Houweling. His earlier research into the non-competition clause shows that employers often misuse this provision, “companies also regularly use the non-competition clause as pocket change when negotiating matters such as severance pay”.

There is a lack of legal standards regarding these non-competition clauses. This situation is no problem for top officials: they are assisted in contract negotiations by lawyers and have substantial negotiating power. This differs for ordinary employees: “they just want to work in a new job. Then it is not so easy to start a conversation about the consequences of a possible divorce”, says Houweling.

The proposals by D66 and PvdA to oblige companies to pay compensation to employees who are limited in their possibilities to change jobs are a logical step forward, according to Houweling. Such an obligation already applies in other European countries, thus partially shifting the burden of the non-competition clause to the employer: “Now the pain lies entirely with the employees”.

More information

Read the full article in NRC (Dutch) here.