Background

In the International Employment Update of February 2007 we discussed a case regarding a non-compete clause in which the Dutch word “niet” (meaning “not”) was missing. Literal interpretation of the provision led to the employee (actually being encouraged to compete but in any case) not being bound by any prohibition to compete. In that matter the cantonal court decided that the statutory provisions which require non-compete clauses to be agreed in writing do not allow for courts to ‘repair’ incomplete wording if this would be detrimental to an employee. The consequence of the omission therefore was that the employee was considered not to be bound by any prohibition to compete.

Case

Recently a court ruled in another case regarding a different non-compete clause. This non-compete clause prohibited the employee to “set up, conduct, jointly conduct, cause to be conducted or to have a financial interest in a business competitive with employer’s business”.

Ruling

The court ruled that the (ex-)employee did not violate the non-compete clause by entering into the employment of a competitor of the (ex-)employer. The employer argued that the employee did violate the non-compete clause, since the employment relation caused the employee to have a financial interest in the competitor (the financial interest being the employee’s salary). The court set aside that defence by arguing that the prohibition to have a financial interest in a competitive business was immediately preceded by provisions regarding the prohibition to work as an (competitive) entrepreneur. Therefore the court concluded that the prohibition to have a financial interest did not refer to employment relations. The consequence of the wording of the non-compete clause therefore was that the employee was considered not to violate the non-compete clause by entering into the employment of a competitor of the employer.

What this means for you

Employers should be aware that careful drafting of a non-compete clause is essential.