In a previous blog post we already gave you a number of tips and tricks when concluding a cooperation agreement with a client as a freelancer. One of the elements that often appears in such contracts is a non-competition clause. In this blog post we will take a closer look at the do's and don'ts of a non-competition clause.
What is a non-competition clause?
Clients who want to work with freelancers usually include a non-competition clause in their agreement. The purpose of such a clause is on the one hand to prevent competitors from making use of the experience and competences that the freelancer has acquired during the project and on the other hand to prevent the freelancer from attempting to approach the clients of the client commercially after the assignment.
As a freelancer you usually work for different clients in the relatively short term, you might get into trouble if you blindly sign the proposed non-competition clauses because you are no longer allowed to work in a certain sector, for certain companies in a region, for your client's competitors, ... It is therefore important to know exactly what you are signing and what the negotiating margin is.
Which rules apply?
The non-competition clause for freelancers is not regulated by law, unlike the non-competition clause for trade representatives or for workers. Specifically for freelancers and consultants, the contractual freedom applies that allows the parties to fill in the conditions, sanctions, etc. as they wish.
Despite this freedom of contract in principle, it is generally assumed that the non-competition clause in an agreement with a freelancer (or an independent consultant) must also meet 3 conditions , by analogy with the non-competition clauses provided for by law. These clauses must be limited in time, geographically defined and limited in terms of prohibited activities:
In the first instance, the duration of the non-compete obligation must therefore be limited to the duration that you need to bind customers to you. The precise duration depends on the duration of the collaboration, the specificity of the assignment, etc.
In addition, the clause must be geographically limited to a specific region. This can be a country, province, city or country.
Finally, the activities that are excluded must also be included in the clause and must of course relate to the activities that you have included as a freelancer during the term of the agreement.
What should you pay attention to now?
Always try to negotiate in order to limit the non-competition clause to a reasonable period and also to the geographical area in which you will be effectively active . It is not a good idea to agree to a non-competition clause of 5 years for the whole of Belgium, if you have worked for 6 months for a local company from West Flanders, for example. (Unless of course this company is active throughout Belgium ...). After all, you will need more than 6 months to bind your client's clientele to you, it is generally assumed.
In addition, you can also best ensure that the prohibited activities are described as limited as possible and are effectively the activities that you will perform within the company. "Not carrying out HR activities", for example, could be very generous if you might only be responsible for recruitment or payroll.
Be sure to check the amount of compensation for non-compliance with the clause and check whether this is not an astronomical amount that is totally disproportionate to the value of the assignment or the amount that you can invoice during the assignment.
Finally, also check whether a moderation clause has been included in the agreement that can be formulated as follows, for example: “ In the event of invalidity or invalidity of one of the clauses in the agreement, the clause remains valid for the part that is legally permitted . ”If something similar is included in the agreement, the court may, in the event of disputes, mitigate the clause (or“ adjust ”) to what the court regards as“ reasonable ”. For example: reduce the duration to an acceptable duration or reduce the geographical area. If such a moderation clause is not included in the agreement and the above-mentioned 3 conditions have not been met, the court can declare the clause as a whole null and void and therefore invalid.