Under Dutch employment law, a non-competition clause agreed between an employer and employee must be in writing. Until last year, this rule was interpreted to mean that the clause must be contained in the body of a written employment contract. In 2008, the Dutch Supreme Court rendered a judgment in which this requirement was relaxed. The court ruled that the writing requirement has been met if the employee signs an employment contract which refers to a non-competition clause contained in written employment conditions that have been made available in conjunction with the employment contract.

The Supreme Court in fact imposes two requirements: i) the text of the non-competition clause must have been made available to the employee in writing and ii) the employee must have indicated his agreement to the clause in writing. It is therefore no longer required that the clause be contained in the body of an employment contract (whether in the form of a letter or formal contract). It can, for example, be included in a personnel handbook provided that the employment contract refers to the non-competition clause in the handbook and the employer has made available a copy of the handbook to the employee. According to the court, this is because by signing the contract, the employee expresses his awareness of and agreement to be bound by the non-competition clause referred to in the contract and made available to him in writing.

Responses to the judgment vary. Several sources claim that the ruling does not afford the scope of protection which the writing requirement was designed to offer. The fact that an employee has been given the opportunity to examine the non-competition clause in, e.g., a handbook made available separately by the employer does not automatically mean that the employee has in fact done so and has agreed to it. In our opinion, this objection could be overcome by the employer advising the employee (in writing and/or orally) to review both the contract and applicable conditions carefully before signing and giving him at least some time to do so. It is then the employee’s responsibility to act on this advice or otherwise bear the consequences.

In practice

The judgment substantially increases the options of an employer who wishes to agree a legally valid non-competition clause with his employees. Nevertheless, we recommend that employers continue to include a non-competition clause in the employment contract/letter itself so that they can be certain that the employee is bound by it. Furthermore, whenever the content of the employee’s job changes substantially, or an employment contract for a fixed period is turned into one for an indefinite period, we recommend that a new employment contract/letter be signed containing or referring to the non-competition clause.