# Non-Compete Clause

Source: https://contracko.com/clause-library/non-compete

# Non-Compete Clause

Restricts a party from competing with the other for a defined period, territory and scope of activity.

## What it is

A non-compete restrains one party from carrying on a competing business for a set time and area. In employment it is the concurrentiebeding governed by BW 7:653; in commercial deals (e.g. a business sale or joint venture) it is judged by competition law and reasonableness.

## Why it matters

It protects goodwill, know-how and customer relationships, but an overbroad restraint is often unenforceable. In employment, BW 7:653 requires written form and, for fixed-term contracts, a written motivation of the employer's compelling business interest.

## How to apply it

- Limit duration, geography and activity to what is genuinely necessary.
- For employees, put it in writing and motivate it for fixed-term contracts (BW 7:653).
- In a business sale, align scope with the goodwill actually being protected.
- Consider pairing with a penalty clause to make enforcement practical.

## Sample wording

> For twelve (12) months after termination, the Party shall not, within the Netherlands, engage in any business that directly competes with the other Party's core activities as carried on at the date of termination.

## Negotiation tips

- • The restrained party should narrow scope, shorten duration and seek compensation.
- • For employees, a court may reduce or annul an overbroad clause, so keep it proportionate.

## Common pitfalls

- • Drafting an employment non-compete without the written motivation now required for fixed terms.
- • Confusing the strict employment regime with the looser commercial reasonableness test.

### How Contracko helps

Contracko stores all employment and commercial agreements containing non-compete clauses in one searchable repository, making it straightforward to check the scope and expiry date for any former employee or business partner. Its AI review flags clauses with missing scope limits or no written motivation for fixed-term employment contracts, and tracks non-compete expiry dates with reminders so enforcement decisions are made on time.

## Legal references

- [BW 7:653 Employment non-compete (concurrentiebeding) Dutch law](https://wetten.overheid.nl/BWBR0005290)
- [BW 6:248 Reasonableness and fairness (commercial restraints) Dutch law](https://wetten.overheid.nl/BWBR0005289)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[Staffing & Recruitment](https://contracko.com/industries/staffing-recruitment)[Consulting](https://contracko.com/industries/consulting)[Software Development Agencies](https://contracko.com/industries/software-development)[Marketing & Creative Agencies](https://contracko.com/industries/agencies)[Financial Services](https://contracko.com/industries/financial-services)

## Related clauses

- [Non-Solicitation Clause](https://contracko.com/clause-library/non-solicitation)
- [Confidentiality Clause](https://contracko.com/clause-library/confidentiality)
- [Liquidated Damages Clause](https://contracko.com/clause-library/liquidated-damages)

## Related terms

- [Non-compete](https://contracko.com/glossary/non-compete)
- [Good faith](https://contracko.com/glossary/good-faith)
- [Breach of contract](https://contracko.com/glossary/breach-of-contract)

### Never miss a contract deadline again

- AI finds renewal and notice dates
- Risks and obligations are surfaced automatically
- Reminders help you act before dates slip

Drop a contract to start

PDF, DOCX, PNG, or JPG

[Start 7-day trial](https://app.contracko.com/register?appLanguage=en&utm_source=clause_library_sidebar&utm_medium=lead_magnet&utm_campaign=clause_library_sidebar_contract_upload&content_slug=non-compete&content_title=Non-Compete+Clause&cta_placement=clause_library_sidebar_cta&source_tool=clause_library_sidebar_non-compete)

GDPR compliant. Encrypted. Never used for AI training.

## Frequently asked questions

Common questions about this clause.

- **Q:** Are non-compete clauses enforceable in the Netherlands?
  **A:** Yes, within limits. Employment clauses must meet BW 7:653 (written form, and motivation for fixed-term contracts); courts can narrow or annul overbroad restraints.

- **Q:** Is a commercial non-compete judged the same as an employment one?
  **A:** No. Commercial restraints (e.g. on a business sale) are tested under competition law and reasonableness, not the strict BW 7:653 employment regime.

- **Q:** Can a court partially enforce an overbroad non-compete?
  **A:** Yes. Dutch courts regularly narrow the duration, territory or scope rather than strike down the clause entirely, so an overbroad restraint may still partially bind the restrained party.

- **Q:** Must an employer pay compensation during the non-compete period?
  **A:** Not automatically under current Dutch law, but courts may take the absence of compensation into account when assessing reasonableness and when awarding damages to the restrained employee.

- **Q:** Is a non-compete clause automatically void if the employer terminates the employee?
  **A:** Under BW 7:653b it may lapse if the employer terminates without a serious reason attributable to the employee. Courts assess whether reliance on the clause is still reasonable in that case.

## Never miss a risky clause again

Contracko automatically reviews every contract for this clause and the obligations it creates.

[Start 7-day free trial](https://app.contracko.com/register?appLanguage=en)

Book demo