# Non-compete

Source: https://contracko.com/glossary/non-compete

# 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.

### How Contracko helps

Contracko stores non-compete and non-solicitation clauses with their duration and geographic scope as searchable metadata. When an employee leaves or a commercial relationship ends, you can instantly retrieve the applicable restrictions rather than searching through filing systems.

## Legal references

- [BW 7:653 Dutch Civil Code: non-compete in employment Dutch law](https://wetten.overheid.nl/BWBR0005290)

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 & SaaS](https://contracko.com/industries/software-saas)[Marketing & Creative Agencies](https://contracko.com/industries/agencies)

## Related clauses

- [Non-Compete Clause](https://contracko.com/clause-library/non-compete)
- [Non-Solicitation Clause](https://contracko.com/clause-library/non-solicitation)
- [Confidentiality Clause](https://contracko.com/clause-library/confidentiality)

## Related terms

- [Confidential information](https://contracko.com/glossary/confidential-information)
- [Non-disclosure agreement (NDA)](https://contracko.com/glossary/nda)
- [Good faith](https://contracko.com/glossary/good-faith)

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## Frequently asked questions

Common questions about this term.

- **Q:** Is a non-compete in a fixed-term employment contract valid?
  **A:** Only if the employer sets out in writing the compelling business interests that justify it; without that motivation the clause is generally void.

- **Q:** Can a court reduce the scope of an overly broad non-compete?
  **A:** Yes. Dutch courts regularly reduce geographic scope, duration, or activity restrictions to what is proportionate. Relying on a court to save an overreaching clause is risky; drafting proportionately from the start is safer.

- **Q:** Does a non-compete apply after the employer terminates the employee?
  **A:** Dutch courts can reduce or set aside a non-compete if the employer terminated the employment without the employee being at fault. The rationale is that the employer cannot impose restrictions while simultaneously triggering the unemployment.

- **Q:** Are non-competes in commercial (B2B) contracts treated differently from employment non-competes?
  **A:** Yes. B2B non-competes are assessed under general contract law rather than the specific employment provisions of BW 7:653. They are generally more freely enforceable, but still subject to reasonableness and competition law limits.

- **Q:** What is the difference between a non-compete and a non-solicitation clause?
  **A:** A non-compete restricts working for or starting a competing business. A non-solicitation clause restricts approaching specific customers or employees of the former employer, without necessarily prohibiting all competitive activity. Non-solicitation is typically easier to enforce.

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