07 Mar '24
The purpose of the non-compete clause is to protect the employer's competitive position, e.g. trade secrets, customer contacts, etc. The employer therefore has an interest in preventing an employee's transfer to a competitor from allowing that competitor to benefit from such valuable knowledge, insight and information. This objective was recently confirmed by the Supreme Court in its judgment of 17 June 2022.
Practice shows, however, that the non-compete clause is included in employment contracts even when there is no real protection of competitive position. The non-compete clause is often a standard clause in an employment contract and is therefore also included in the employment contracts of employees who do not come into contact with confidential business information, customers, etc. The government considers this undesirable.
This is because a non-compete clause can have far-reaching consequences for employees, affecting their fundamental right to choose their employment. It also hampers labour mobility.
Therefore, on 4 March 2024, the government submitted a bill for internet consultation to restrict the possibility of agreeing a non-compete clause.
The main changes to the non-compete clause in the bill are as follows:
No date of entry into force has yet been announced. Transitional law will apply, which should result in legally agreed non-compete clauses remaining in force before the effective date. This means that non-compete clauses agreed before the effective date do not have to comply with the formal requirements set out in points 1 to 3 above. However, the maximum duration of 12 months and the obligation to pay compensation if the non-compete clause is invoked will apply.
The internet consultation will run until 15 April 2024. This is the deadline for responding to the draft bill and expressing ideas about it.
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