When is a non-compete clause in an employment contract valid?
Non-compete clauses are common in employment contracts. Employers use them to prevent employees from joining competitors or starting a competing business after their contract ends. But such clauses aren’t always legally enforceable. This blog explains when a non-compete clause is valid under Dutch law, what legal conditions apply, and how courts assess whether the clause holds up.
What is a non-compete clause and why is it used?
A non-compete clause limits an employee’s ability to work for a competing company or start a similar business after the employment relationship ends. Employers use it to protect their business interests, such as customer relationships, confidential information, or unique knowledge of products and processes.
Although employers' interests are recognized, a non-compete clause restricts an employee’s freedom to change jobs. That’s why the law imposes strict requirements on the validity and proportionality of such clauses.
Non-compete clauses in fixed-term contracts
In temporary employment contracts, non-compete clauses are generally not allowed. However, the law makes an exception if the employer:
provides a written justification, and
proves that the clause is necessary due to compelling business or service interests.
A generic justification, such as “to protect sensitive business information” is not enough. The explanation must be tailored to the specific situation of the employee. If it is missing or insufficient, the clause is void and unenforceable.
Non-compete clauses in permanent contracts
In permanent contracts, non-compete clauses are permitted, but limits still apply. Employers must demonstrate that the clause is essential to protect a legitimate business interest. It cannot simply be used to bind employees or restrict their job mobility.
Additionally, the clause must be reasonable and proportionate in relation to its purpose. Its duration, geographic scope, and the type of restricted activities must be balanced. If the clause is too broad, a court may limit or nullify it.
Not suitable for all roles
In practice, non-compete clauses are still often included in contracts for operational staff, such as retail workers, drivers, or warehouse employees, roles where access to confidential or strategic information is minimal. In such cases, it's difficult to justify the necessity of a non-compete clause.
When courts review these clauses, they look at the actual risk posed to the employer. If there is no clear reason to restrict the employee's access to new work, the employee’s interest in job mobility will outweigh the employer’s, and the clause may be partially or fully annulled.
Conclusion
A non-compete clause can be a useful tool for protecting business interests, but it must not unfairly restrict an employee’s mobility. Especially in temporary contracts or positions without access to sensitive information, the legal threshold is high. Employers should carefully draft and justify these clauses. Employees with doubts about a non-compete clause should seek legal advice to understand their position and assess whether the clause is legally valid.
This blog was written by Mr. Stijn Blom
Employment law attorney at expatlawyer.nl B.V. Stijn has extensive experience in employment law and supports entrepreneurs on a daily basis with a wide range of employment law issues. From dismissal cases to drafting watertight agreements and regulations – with his practical and personal approach, he helps employers and employees move forward. Want to know more? Visit Stijn’s page.
Expatlawyer.nl is happy to think along with you if you have questions about the topic of the non-compete clause. Feel free to get in touch.
June 2025
