Non-compete clauses in the Netherlands: how the landscape is set for change

The non‑compete clause (NCC) is once again in the spotlight. With the installation of the government of Prime Minister Rob Jetten in the Netherlands, discussions surrounding the non‑compete clause has been revived. Relevant statutory provisions will likely be amended during the term of Jetten's cabinet. Therefore, the question is not if you as an employer in the Netherlands will be affected, but when and how significantly.

The following article outlines the current situation and proposed changes, and provides practical tips.

How does the NCC currently work?

A non‑compete clause restricts an employee’s ability to perform activities after termination of the employment agreement that could compete with the former employer’s business (e.g. by moving to a direct competitor or starting a competing business). The same statutory framework applies to the non‑solicitation clause, which prohibits approaching a former employer’s clients.

The current statutory provisions require NCCs to be agreed upon in writing with an adult employee in an indefinite employment agreement. If included in a fixed‑term employment agreement, the NCC is void unless the clause contains an unambiguous justification of the compelling business or service interests that warrant its inclusion. In practice, whether a NCC can be enforced is highly case‑specific, often depending on a judge’s assessment in summary proceedings and applying a marginal review. The judge weighs the employer’s interest in enforcement against the employee’s interest in mitigation or annulment.

Many employers rely on standard template wording for NCCs, which makes them difficult to enforce in case‑specific situations.

A 2021 study on the functioning of NCCs by the Dutch research institute Panteia showed that they are applied so frequently in practice that employees’ freedom of labour mobility is under pressure. At the same time, employers experience difficulties in hiring new staff because many potential candidates are bound by potentially enforceable NCCs.

The Bill modernisation of the NCC

Following the conclusions of the Panteia study, former Prime Minister Mark Rutte announced the Bill Modernisation of the Non-Compete Clause in 2023. The objectives of this Bill include:

• Preventing unnecessary use of non‑compete clauses;
• Increasing mobility and freedom of job choice;
• Creating a more balanced assessment of interests between employer and employee;
• Providing greater legal certainty through clear formal requirements;
• Protecting the employer’s sensitive business information and client relationships.

The Bill introduces strict formal requirements for agreeing on a non‑compete clause, including:

• A maximum duration of 12 months;
• A specified geographical scope;
• A concrete justification of the compelling business interest that justifies the clause.

The employer must explicitly invoke the clause before the employment ends. The employer must inform the employee in writing and in good time whether and for how long the clause will be enforced.

If the employer invokes the clause, they must pay 50% of the employee’s last monthly salary for the duration of enforcement. If payment is not made on time, the clause lapses automatically.

What can be expected during the upcoming government?

After the online consultation for the Bill closed in 2024, no further steps were taken by the Schoof government regarding amendments to NCCs.

The coalition agreement of the Jetten government, however, does contain a passage urging employers to modernise their non‑compete clauses, enabling employees to move more freely on the labour market and switch jobs more easily.

It is therefore realistic to expect amendments to the law on NCCs during the coming term. While adjustments to the Bill are possible, the draft legislation will likely remain aligned with the objectives of fewer standard clauses, more tailored wording, and financial consequences for employers.

Practical tips for employers

Although still a legislative proposal, businesses in the Netherlands advisable to prepare for the upcoming amendments, and include in each NCC a compelling interest, temporal scope, and geographical scope. In that sense, aligning with the Bill as soon as possible is good practice.

Some further practical points include:

• Adjust current NCCs in advance. Prepare to revise your standard documents. Employment agreement templates with NCCs will almost certainly require amendments, including specific justifications, geographic limitations, and maximum duration.
• Determine internally who within an organisation has authority to decide whether the NCC will be enforced.
• Map out the following:
  • For which roles is a NCC truly necessary?
  • When is a non‑solicitation or confidentiality clause sufficient?
  • Which interests must be protected by the clause (e.g. customer data, strategic information, etc.)?
• Distinguish between the old and new regimes. Because employers will soon have to work with two systems, proper administration is important.

One thing is clear: to enforce a non‑compete clauses, a business cannot afford to sit still.

For advice on the steps to take to align your NCC with the proposed changes, contact your CMS client partner or the CMS experts who contributed to this article.