Under Dutch Law restrictive covenants, such as non-competition restrictions, are commonly used in the employment agreement. If a non-competition clause has been agreed on, Cantonal Courts tend to apply the provisions quite strictly, even when the employee has changed jobs during the employment (without signing a new non-compete clause). Only in very exceptional cases might a Court rule that a non-compete clause is no longer valid because of a change of role (assistant to director of a company, for example).
However, as a non-competition clause restricts the employee's freedom to choose employment, Dutch Law also includes a provision for the protection of employees. A Court can annul a non-competition clause, either completely or partially (even during employment), where an employee is unfairly prejudiced by the clause in relation to the interests of the employer. Whether and to what extent the Court will use its power to annul a non-competition clause completely or partially will depend upon the circumstances of the case. The following factors may play a role:
Employees must be able to continue their development in accordance with their skills and aptitude. Here, salary and position are important, as well as the alternatives an employee may have, taking into account the employee's training, specialisation, age and work experience.
The circumstances under which the employment agreement is terminated may play a role; an example would be the fact that the employee has terminated the employment agreement on their own initiative.
It is also important whether the employer has a real interest in the non-competition clause, for example because the employee has business information knowledge, such as customer files which, if they were disclosed to competitors, would give them an unjustified advantage. Also, the employee may have established a good relationship with customers or other parties and could entice them to leave with the employee.
A court will of course also consider the extent to which a non-competition clause has been restricted. Geographic area plays a role, along with other factors such as the duration of the clause. One year is not uncommon, but two years would be unusual. Whether the duration of the clause is reasonable depends, among other things, on the period during which the key knowledge of the employee remains accurate and/or the employee's relationships with clients of the former employer could give the new employer an unreasonable advantage.
Restrictive covenants are usually strengthened by a penalty clause. A Dutch court may also reduce these contractual penalties, if and in so far as the court finds them excessive in the particular case.
Hiring an employee of a competitor, if the new employer is aware of the fact that the employee may breach obligations under restrictive covenants, could qualify as an unlawful act towards the former employer.