Non-compete
A clause restricting a party from competing with the other for a defined time and area.
Definition
A non-compete clause restrains a person or business from engaging in competing activity for a set period and within a defined geographic or market scope. To be enforceable it must protect a legitimate interest and be reasonable in scope and duration. In Dutch employment, the concurrentiebeding is tightly regulated under article 7:653: it must be in writing with an adult employee and, in fixed-term contracts, requires a written motivation of compelling business interests.
Example
A departing sales manager is barred from joining a direct competitor within the Netherlands for twelve months under a written non-compete.
Why this is a business risk
A non-compete that is too broad in scope, geography, or duration may be void or reduced by a court, leaving the business with no protection at all. Conversely, an overly aggressive non-compete that effectively prevents someone from earning a living is increasingly scrutinised by Dutch courts and may backfire. In B2B contexts, non-competes in commercial contracts require careful drafting to survive the proportionality test.
How to manage it
- Match the scope to the legitimate interest: if you are protecting customer relationships in the Netherlands, you do not need a worldwide ban on all competing activity.
- In employment contracts, document the compelling business interests in the clause itself, especially for fixed-term contracts.
- Pair the non-compete with a non-solicitation clause if protecting client relationships is the core concern, as this is often less vulnerable to challenge.
- Consider offering compensation for the restriction period, particularly in commercial contracts, to increase enforceability.
Legal references
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.
Frequently asked questions
Common questions about this term.