Clauses, Competition, Relation, and Secrets

(NL: Concurrentiebeding, relatiebeding, geheimhoudingsbeding).

By F. Jager, 30-11-2022 , HR4Expats

This question always comes up when I send the contract to a new employee: ‘what does the competition clause entail?’. It is the one clause in the contract that is always vaguely described.

Competition Clause

An employer and employee agree that after the contract duration, the employee will not compete or undertake activities that will harm the company. This is called a competition clause (NL: concurrentiebeding).

Imagine John works as a store manager for X-Store. He got the notification that his contract would not be extended. Therefore John sends out an application to the Z-Store to become the new store manager. When X-Store discovers this, they tell John he is not allowed to work for the Z-Store. This is because of the competition clause.

This sounds extremely unfair. However, looking from the company’s perspective, it makes sense. John obtained much knowledge and experience regarding X-Store’s clients and strategy. The X-Store does not want John to share this knowledge with the competitor.

Does this mean John could never work at Z- Store? No, there are rules that protect employees from the competition clause. Here are some things you need to know.

The competition clause is only valid when it is on a written agreement (contract). A verbal agreement regarding the competition clause is not lawfully valid. This is not valid even if the competition clause is stated in the CAO. The employee must be informed in advance how he will be limited after the duration of the contract. Moreover, if your contract gets extended, the employee must sign again on a written agreement for the competition clause to be valid.

Second, the competition clause is not valid for underaged employees. Fun fact, most companies are not aware of this. I have personally seen many contracts with competition clauses signed by 16-year-olds. Even if a minor signed a contract with a competition clause, the clause is not valid.

So, if I’m not a minor, can my company add this clause to my contract? No, they cannot. If you have a definite contract the company must motivate the clause (on a written agreement) about the necessity and why it could otherwise have a significant effect on the company. Without this written motivation, the clause is invalid. Similar conditions apply to the relationship clause and Secrecy clause (NL: geheimhoudingsbeding en relatiebeding).

Relationship Clause
Often, I get many questions regarding the relationship clause. The relationship clause means you are not allowed to bring your ‘relations’ with you after your contract ends. Imagine you work for a logistics firm, and you bring all your clients with you to your new job. That is, of course, not fair for the company. There for, the relationship clause limits the employee to take its relations. 
With ‘relations’, we mean all forms of relations you made while working for the company. These relations can be clients, students, or colleagues, for example. With the relationship
clause, you are not allowed to ‘steal’ the relations for the company in a specific time frame (often, this is 6 months).

I know it must sound very unfair to all these different clauses since they limit you as an employee with finding a new job. That is why it is essential to know when the clauses are valid and to what extent they restrict you. Here is some advice before signing the contract, ask the company to specify the clause (for how long, what area, what competitors, etc.).

Source:
• Burgerlijk Wetboek, artikel 7:653 (2022)