Why competition clauses in temporary contracts are so different
Suppose you have a six-month temporary contract. You’re excited to get started. Then suddenly you see a non-compete clause. You are not allowed to work for a competitor for another year after those six months. That feels like you are being punished for finding a new job.
This is exactly why competition clauses in temporary contracts are such a thing. It limits your chances, while your employer only offers you security for a short time. A bit like getting a small piece of beach but not being allowed to swim.
The legislator also saw this problem. A non-compete clause in a temporary contract is strange. The employer wants to protect its interests, the employee wants to be able to move on after the contract. Since 1 January 2015, a competition clause is in principle no longer allowed in a temporary contract in the Netherlands. This change in the law protects employees with temporary contracts. Read more about the change in the law here. But there are exceptions. More on that later. In some cases, an employer may still include a non-competition clause.
The tension between corporate interest and employee freedom
What is it all about? About balancing the interests of employer and employee. Employers want to protect their trade secrets, retain their customers and stay ahead of the competition. Suppose a company develops special software. Logically, they would not want a temporary employee to go to the competitor with the source code.
On the other hand: an employee simply wants to continue his career after a temporary contract. Without restrictions.
Why is this such a complex issue?
It is complex because there are no standard answers. Every situation is different. You have to weigh all interests. The duration of the contract, the nature of the work and access to confidential information come into play.
Did someone work for a month and not see any classified information? Then a one-year non-compete clause is unreasonable. But someone working on a new product for a year? Then a non-compete clause, subject to conditions, can be right.
With all these nuances, clear rules are difficult. That is why there is often discussion about whether a non-compete clause in a temporary contract is allowed. Below, you will read more about the rules and see practical examples. This will give you a clear picture of this complicated matter.
The legal ground rules: a clear look at the non-compete clause
Legal language can sometimes feel like a maze. So let’s take a clear look at the non-compete clause in temporary contracts. When is it really legally valid?
A non-compete clause is quite often included in temporary contracts (60%), on average for 12 months. But actually enforcing it is less often successful (45%). This shows how important it is to understand the rules properly. Since 2015, a non-competition clause in a temporary contract is in principle prohibited unless the employer has substantial business interests.
What are compelling business interests?
“Substantial business interest” is not an empty phrase. It is about protecting truly vital business information. Think: secret recipes, unique technologies or a special customer base. Imagine a software developer with access to the source code of a revolutionary programme. Or a chef who knows the secret spice mix of a famous restaurant. In such cases, even on a temporary contract, a non-compete clause may be justified.
The judge has the final say
Ultimately, the court decides whether a non-compete clause will stand. Each case is unique and is judged separately. An IT consultant who was fired after three months was not vindicated when his employer banned him from working for the competitor for a year. The judge found that he had not been able to learn important trade secrets in that short time. A marketing specialist who took her own clients to her new job did get a legal letter. The judge ruled that she had unfairly favoured the competition.
What factors play a role?
Judges look at several factors, such as the length of the contract, the nature of the work and access to confidential information. A longer contract gives the employer a better chance of justifying a non-compete clause. The position is also important. A senior position with a lot of responsibility? Then the clause is more likely to stand. Finally, access to trade secrets is crucial. Does the employee have really sensitive information? Then, despite a temporary contract, a non-competition clause may be justified.
Let us look at the main differences between a non-compete clause in temporary and permanent contracts in the following table:
Comparison: competition clause in temporary vs permanent contracts
Overview of key differences in regulations, enforceability and conditions
| Aspect | Temporary contract | Fixed contract | Notes |
| Principle | Forbidden | Permitted | With a temporary contract, a non-compete clause is in principle prohibited, but not with a permanent contract. |
| Exception | Serious business interests | N/A | A competition clause in a temporary contract is only possible in case of substantial business interests. |
| Duty to state reasons | Written and specific | Recommended | The employer must justify in writing and specifically why the clause is necessary in a temporary contract. |
| Judicial review | Stricter | Less strict | Judges look more critically at competition clauses in temporary contracts. |
The table clearly shows that the legislator has stricter requirements for a non-competition clause in a temporary contract than in a permanent contract. The exception and the duty to state reasons are essential elements to take into account.
The duty to state reasons: a solid basis
The employer must always justify the necessity of the clause in a temporary contract in writing, specifically and concretely. “To protect business interests” does not suffice. The employer must demonstrate which interests are being protected and why the clause is necessary for that purpose. A clear justification is essential. Think of it as the foundation of a house – without it, everything collapses.
When employers do get their way: the exceptions
We already saw that, in principle, a non-compete clause in a temporary contract is not allowed. Nevertheless, there are exceptions. Think, for instance, of an interim director in the middle of secret takeover talks. Or a software developer working on a revolutionary algorithm. In such cases, a non-competition clause temporary contract may be justified. But under what conditions?
Serious business interests: when is something really important?
The law speaks of compelling business interests. This is the crux of the matter. It is about protecting truly vital information. Compare it to Coca-Cola’s secret formula, or a major bank’s customer data. It is not enough to simply state that important knowledge is at stake. The employer must actually be able to prove it.
Concrete examples: from drugs to software
Suppose a pharmaceutical company hires a temporary researcher to develop a new drug. If this researcher transfers to a competitor, it could jeopardise years of research and millions of euros of investment. A court could rule in such a case that a non-compete clause is justified despite the temporary contract.
Another example: an IT company hires a temporary consultant for an important project. This consultant gets access to sensitive information about the business strategy and customer base. Again, a non-compete clause could stand.
The burden of proof: the employer must come up with the evidence
The employer must prove that the non-compete clause is necessary. This means he must prove that there is a real risk of harm if the employee joins the competitor. How does an employer tackle this smartly? By gathering concrete evidence, for example:
- Documents showing what confidential information the employee has seen.
- Statements from colleagues that can confirm that the employee had access to trade secrets.
- A clear description of the potential damage to the company.
What can an employee do?
An employee can also defend against a non-compete clause. For example, he can show that:
- He had no access to truly confidential information.
- The non-compete clause unreasonably restricted him in his career.
- The employer does not offer him adequate compensation for the restriction of his freedom.
Case law shows that judges look critically at competition clauses in temporary contracts. They carefully weigh the interests of employer and employee. A competition clause is only approved if it is really necessary to protect the company’s interests.
Money on the table: what to expect in compensation
If a non-compete clause prevents you from working for a competitor, who pays the bills? This is a legitimate question. Limiting your job opportunities naturally has financial consequences. Let’s see how compensation works in practice. Some employers are willing to pay a hefty sum, while others try to settle it with a token amount.
Reasonable and less reasonable fees: real-life examples
By looking at concrete examples, you get a better idea of what is reasonable. Imagine this: a consultant is given three months’ salary for a one-year non-competition clause. A decent compensation, because he cannot work for a competitor for a year. But then you also have the story of the salesman who was offered nothing at all. A world of difference.
How are our neighbours doing? A look across the border
It is interesting to see how other European countries deal with non-competition clauses. In Germany, for example, half of the salary is often continued to be paid during the term of the clause. Such differences show that there are multiple ways of dealing with this.
In the Netherlands, the government announced in 2023 that the non-competition clause will be curbed. There will be a maximum duration of 12 months and mandatory financial compensation. These changes could strengthen employees’ bargaining power.
What factors determine the amount of compensation?
Several factors play a role in determining compensation. Consider the duration of the non-competition clause, your salary and the impact on your career. A longer clause and a higher salary usually lead to higher compensation. The industry is also important. In some sectors, competition clauses are standard and are often accompanied by compensation.
Negotiating: how to get a good deal?
As an employee, it is important to properly negotiate the terms, including compensation. Prepare well and know your rights. Be realistic, but also dare to stand up for yourself. Well-negotiated compensation can significantly mitigate the negative consequences. See it as an investment in your future. Bear in mind that a non-competition clause may limit your career opportunities, despite compensation. Be aware of this consideration.
The future of fees
The new legislation around non-compete clauses will undoubtedly affect how compensation is set. The mandatory compensation provides more clarity, but also raises new questions. How does it affect employees’ bargaining power? And what are the implications for employers? We will get more clarity on this in the near future.
Employers at the helm: strategies and alternatives
How do employers protect their interests when a non-compete clause in a temporary contract is so onerous? Instead of desperately clinging to a clause that may not hold up, smart employers opt for more creative solutions. Consider, for instance, improving terms of employment or offering loyalty bonuses. An attractive job can motivate employees much better than a questionable non-competition clause.
Alternatives to the non-compete clause
Suppose an IT company wants to retain its employees. Instead of a non-compete clause, they introduce an attractive bonus programme. Employees who stay longer receive a bonus, reducing the temptation to switch to competitors. Another example: a consulting firm opts for extensive non-disclosure agreements (NDAs). By focusing on protecting confidential information, they achieve a similar result without unduly restricting the employee. In the Dutch labour market, non-competition clauses are often used to prevent employees with specific knowledge or skills from transferring to competitors. At the same time, these restrictions do create debate about the balance between company interests and the flexibility and freedom of employees.
The cost of enforcement: an expensive joke
A non-enforceable non-compete clause is useless. Going to court is expensive and time-consuming. Sometimes it is wiser to invest in retaining employees by creating a pleasant working atmosphere and good working conditions, rather than threatening them with a non-competition clause.
Garden leave: staying at home with salary
Garden leave is another option. In this, the employee continues to be paid, but has to stay home for the duration of the non-competition clause. This way, he cannot share knowledge with the competitor, but keeps his salary. It is crucial that these arrangements are clearly set out in the contract.
Recruitment: attract instead of shackle
Modern employers are overhauling their recruitment strategy. Instead of trying to tie employees down with a non-compete clause, they are focusing on creating an environment where talent wants to stay. A positive company culture, advancement opportunities and attractive employment conditions are much more effective in this regard.
Impact on corporate culture
Openness about the non-compete clause creates trust. Clear communication about its reasons and conditions contributes to a good working atmosphere. It is important not to use the clause as a threat, but as a tool to protect the interests of both parties.
Tips for employers
- Focus on secrecy: Invest in good NDAs to protect trade secrets.
- Attractive conditions: Offer good working conditions to bind and enthrall employees.
- Open communication: Be transparent about the non-compete agreement and explain the reasons behind it.
- Consider alternatives: Consider options such as garden leave or loyalty bonuses.
- Legal advice: Always consult a lawyer when drafting a non-compete agreement.
Knowing your rights: what workers can really do
Knowledge is power, especially when it comes to a non-compete clause in a temporary contract. Imagine a graphic designer doubling his severance pay by proving that his non-competition clause was invalid. Or an account manager discovering that her employer was bluffing about enforcing it. Such situations show how important it is to know your rights.
Signs that a non-compete clause is contestable
So how do you know if a non-compete agreement is sound? Pay attention to these alarm bells:
- Unclear language: what is “competitor”? What is “similar work”? Vague terms often make a clause contestable. Clarity is key.
- Too long: Not allowed to work for a competitor for a year after a three-month contract? That smells of unreasonableness. The duration should be proportional to your contract and the knowledge gained.
- No compensation: Does the clause limit your options? Then you should expect compensation. Indeed, the government is working on mandatory compensation.
Preventive action: negotiating pays off
Prevention is better than cure. Discuss the competition clause already during your job interviews:
- Ask questions: Why is this clause necessary? What is the employer’s rationale behind it?
- Negotiate: Too long? Fee too low? Discuss it! You have more room to negotiate than you think.
Fight or continue the search?
Sometimes it pays to fight, sometimes not. Weigh the following points:
- Odds: How likely are you to win? Consult with a lawyer for an estimate.
- Costs: What does litigation cost? Weigh this against the potential profit.
- Time: Procedures take time and energy. Are you willing to invest those?
Sometimes it makes more sense to focus your energy on a new job than on a protracted legal battle.
The following table provides a practical roadmap for employees facing a potentially abusive non-compete clause. It helps you think through your options in a structured way and take the right steps.
Roadmap: what to do in the event of an illegal non-compete clause
Practical guide for workers to protect their rights:
| Step | Action | Important to know | Time limit |
| 1 | Consult a lawyer: Discuss your situation and options. | A lawyer can advise you on your rights and the feasibility of proceedings. | As soon as possible |
| 2 | Contact your employer: Try to reach a mutually agreed solution. | Sometimes an out-of-court settlement is possible, saving time and money. | Within reasonable time |
| 3 | Consider mediation: A mediator can help find a compromise. | Mediation is often quicker and cheaper than litigation. | Depending on mediator |
| 4 | Step to court: If consultation fails, you can start proceedings. | A lawsuit is the last option, but sometimes necessary. | Within legal deadlines, consult a lawyer |
The table shows that there are several steps you can take, from consultation to going to court. It is important to be proactive and get informed about your rights and options.
By knowing your rights and acting proactively, you are stronger. A non-compete clause in a temporary contract need not be an obstacle to your career.
Practical wisdom: what you can do now
You have now digested quite a bit of information about competition clauses in temporary contracts. Let’s translate this knowledge into concrete steps. Whether you are an employer or an employee, here are practical tips you can apply immediately.
For employers: drawing up a watertight contract
A legally valid non-compete clause in a temporary contract requires care. Think of it as building a house: a solid foundation is crucial. Here are a few key points to consider:
- Concrete justification: avoid general wording. Specify which business interests you want to protect and why this clause is necessary to do so. For example, explain what specific knowledge or skills the employee gains that could give a competitor an edge.
- Focus on the job: The motivation should be directly linked to the tasks and responsibilities of the job in question. After all, a secretary has different interests than a sales manager.
- Clear wording: Do not use vague terms. Clearly define what you mean by “competitor,” “similar work” and the geographical area within which the clause applies.
- Reasonable duration and compensation: Think carefully about the duration of the clause and its impact on the employee’s career prospects. Appropriate compensation is important and will soon even become mandatory.
- Legal advice: Have your contract checked by a lawyer, for example at Law & More This will prevent unnecessary problems afterwards.
For workers: know your rights and protect yourself
A competition clause in your temporary contract? Don’t just sign it. Ask critical questions and negotiate the terms:
- Is the clause necessary? Ask your employer about the specific business interests that need to be protected. Is there actually a risk of competition?
- Is the duration reasonable? A one-year clause after a three-month contract is often unreasonably long.
- Will I get compensation? If not, definitely try to arrange this. An allowance compensates for the limitation of your career opportunities.
- Check the contract: look out for unclear wording and unreasonable restrictions.
- Seek legal advice: In doubt about the validity of the clause? Then contact a lawyer, for example at Law & More
Future prospects: what’s ahead?
The legislation surrounding non-compete agreements is evolving. The rules are expected to become stricter. This means that employers will have to be even more careful when drafting contracts. For employees, this actually offers more protection. Stay on top of developments and make sure you are well informed.
Take action!
Don’t wait any longer. Whether you are an employer or employee, take action today: review your contracts, seek advice and negotiate the terms. A properly drafted non-competition agreement protects the interests of both parties. Law & More can help you with this. Contact us for legal advice