Non-compete clause in a temporary contract: when is it valid

A non-compete clause (concurrentiebeding) in a fixed-term employment contract is permitted under Dutch law, but only on a condition that does not apply to permanent contracts: article 7:653 paragraph 2 of the Dutch Civil Code requires the employer to state in writing, in the clause itself, the compelling business interests (zwaarwegende bedrijfsbelangen) that make the restriction necessary. Without that written motivation the clause is void, and no amount of later explanation repairs it.

That single rule decides most disputes about non-compete clauses in temporary contracts. Since 1 January 2015 the legislature has treated such a clause as the exception rather than the norm, on the reasoning that an employee who is offered only a few months of security should not have to accept a restriction that outlasts the contract. This article sets out when the exception applies, how courts test it, what happens on renewal, and what employers and employees can do about it. For the general rules that apply to every non-compete clause, see our main article on the non-competition clause.

When a non-compete clause is valid in a fixed-term contract

Article 7:653 BW sets out three layers of requirements, and a clause in a temporary contract has to satisfy all of them.

• Agreed in writing with an adult employee. Paragraph 1 requires the clause to be agreed in writing with an employee of full age. A reference in a staff handbook or a set of general terms is only enough if the employee expressly accepted the document containing the clause, in writing, and the document was actually provided.
• Written motivation of compelling business interests. Paragraph 2 adds that a clause in a contract for a definite period is only valid if the employer sets out, in the clause, the compelling business interests that require it. The motivation is part of the clause; it cannot be supplied afterwards, and a court will not read one in.
• The motivation must be specific. A general phrase such as protecting the commercial interests of the company or safeguarding know-how is treated as no motivation at all. The employer must identify which knowledge, which relationships or which commercially sensitive information this employee will have, and why the departure of this employee to a competitor would harm the business.

The consequence of a missing or purely generic motivation is not that the clause is weakened; it is that the clause never validly came into existence. That distinction matters in practice, because it means the employee is not restricted at all and does not need to ask a court to set anything aside before taking a new job, although in a contested case a declaratory judgment is often still worth obtaining.

What counts as a compelling business interest

The statute does not define the term, and deliberately so: what is compelling depends on the business and the role. The test that has developed in the case law is whether the employer has specific, identifiable knowledge, information or business relationships that this employee acquires through the job, and whose transfer to a competitor would cause real harm.

Clauses that survive review tend to involve a genuinely distinctive asset: a production process or formulation that is not publicly known, software or algorithms under development, a pricing model, a strategy for entering a market, or a personal relationship with a defined group of clients that the employee is expected to build. Clauses that fail tend to be defended with general skills, ordinary industry knowledge or the fear of losing a good worker, none of which the law recognises as a compelling interest. Wanting to keep an employee is not a business interest that justifies restricting them after they have gone.

The two moments at which the interest is tested

The compelling business interest has to exist twice. It must exist when the contract is concluded, which is what the written motivation records, and it must still exist when the employer actually invokes the clause. An interest that was real at the start but has evaporated, because the project was abandoned, the product was launched publicly or the employee never got near the sensitive material, will not support enforcement. This is why the motivation should be drafted around the job as it will actually be performed rather than around the employer wish list.

The burden is on the employer. In proceedings it is the employer who must show the interest, and the evidence that carries weight is documentary: the description of the role, the systems and files the employee had access to, records of client contact, project documentation, and a concrete account of what a competitor would gain. Assertions by managers about how much the employee knew are rarely enough on their own.

Renewals, chains and a change of role

A non-compete clause does not travel automatically from one contract to the next. Each fixed-term contract is a separate agreement, so when the contract is renewed or extended the clause and its motivation have to be agreed again in writing, and the motivation has to fit the new contract. Employers who simply continue the employment on the same terms by email regularly find that the clause did not come along.

The same applies when a fixed-term contract is converted into a contract for an indefinite period. From that moment the special motivation requirement no longer applies, but the clause itself still has to be validly agreed in the new contract. A permanent contract that says nothing about competition contains no restriction, whatever the earlier temporary contract said. Our overview of the chain rule for fixed-term contracts explains how a chain converts, and our article on the fixed-term employment contract covers the surrounding rules.

A change of role during the employment can also undermine a clause that was validly agreed. Where the job changes so substantially that the clause becomes considerably more onerous than the parties had in mind, the Supreme Court has accepted that the clause loses its force to that extent unless it is agreed again. A promotion from a junior position into a commercial role with client responsibility is the classic example. The practical answer for employers is to re-sign the clause whenever the role changes materially, and to write the motivation around the new duties.

How a court tests the clause

Two routes lead to a court. An employee who wants freedom to start elsewhere usually applies in summary proceedings (kort geding) for the clause to be suspended, which is quick and produces a provisional answer within weeks. An employer who wants to stop a move applies for an injunction, often combined with a claim for the contractual penalty. Either way, the court has broad powers under article 7:653 paragraph 3 BW.

• Annulment for a defective motivation. Where the contract is for a definite period, the court can annul the clause if the motivation given shows that the clause is not necessary on account of compelling business interests. This is the ground that disposes of most badly drafted clauses in temporary contracts.
• Annulment for disproportionate disadvantage. For every contract, temporary or permanent, the court can annul the clause wholly or in part if, in relation to the interest the employer seeks to protect, the employee is unfairly disadvantaged by it. Partial annulment is common: courts shorten the period, narrow the geographic scope, or limit the clause to named competitors rather than an entire sector.

Beyond that, article 7:653 paragraph 4 BW removes the employer right to rely on the clause at all if the ending of the contract is the result of seriously culpable acts or omissions on the employer part. An employer who dismisses an employee unfairly, or who lets the contract lapse after treating the employee badly, cannot then insist on the restriction.

The factors that decide the balancing exercise are consistent across the case law: how long the employment actually lasted, what the employee genuinely learned, how specific and current the protected information is, the width of the clause in time, territory and activity, the position the employee is moving to, and whether the employee has a realistic alternative in the same field. A one-year restriction on an employee who worked for three months in a role without access to anything confidential is the standard example of a clause that will not survive.

Compensation, penalties and the cost of enforcement

Dutch law does not currently require an employer to pay for a non-compete clause, but it does allow a court to award compensation. Under article 7:653 paragraph 5 BW the court may order the employer to pay an amount for the duration of the restriction if the clause significantly hinders the employee from working elsewhere. The compensation is not available if the ending of the contract is the result of seriously culpable conduct by the employee. In practice this power is used sparingly, and an employee who negotiated a compensation clause into the contract is in a far stronger position than one relying on the court.

On the other side, most clauses are backed by a penalty clause (boetebeding). A penalty is enforceable, but it has to be agreed in writing, it must specify the destination of the penalty, and where a penalty is set for breach of an obligation of the employee the statutory rules on penalties in the employment contract apply. A court can also moderate a penalty that is manifestly excessive. Employers should not assume the headline figure will be awarded in full; employees should not assume it will be reduced to nothing.

Enforcement is expensive and public. Summary proceedings take weeks and cost money on both sides, the new employer usually becomes aware of the dispute, and a clause that is then narrowed by the court is worth less afterwards than the threat of it was before. That calculation is often the real reason a dispute settles.

Non-solicitation, confidentiality and garden leave

A non-compete clause is not the only instrument, and it is frequently not the best one. Three alternatives cover most of the same ground with less legal risk.

• A non-solicitation clause (relatiebeding) forbids the employee from approaching specific clients or contacts rather than from working for a competitor at all. It is narrower and therefore more likely to survive review, but Dutch case law treats it as a form of non-compete clause, so in a fixed-term contract it needs the same written motivation of compelling business interests. See our explanation of the non-solicitation clause.
• A confidentiality clause protects the information itself and can run indefinitely without restricting where the employee works. It is not subject to article 7:653 BW, and it is reinforced by the statutory protection of trade secrets, which gives a separate claim where confidential business information is unlawfully acquired, used or disclosed.
• Garden leave keeps the employee on the payroll and away from the workplace during the notice period. It buys time for client relationships to be transferred, and because the employee continues to be paid it raises none of the objections a court makes to an unpaid restriction. It only works where a notice period exists, which is why it fits permanent contracts better than short fixed-term ones.

Temporary and permanent contracts compared

The bill to modernise the non-compete clause

The rules are set to change. On 26 June 2026 the government announced that the bill to modernise the non-compete clause had been sent to the Council of State for advice, with the intention of submitting it to the House of Representatives before the end of 2026. It is a bill, not law: nothing in it applies yet, and the text can still change during the parliamentary treatment.

As announced, the bill would cap the period during which a non-compete clause can be applied at one year, require the employer to specify the geographic area the clause covers, extend the duty to give a written motivation beyond fixed-term contracts, and oblige an employer that actually invokes the clause to pay the employee compensation for the period of the restriction, calculated as a proportion of salary. The stated aim is to confine the instrument to situations where a genuine business interest is at stake.

Until the bill is enacted and enters into force, article 7:653 BW as described above continues to apply in full. Employers reviewing their contract templates now would nevertheless be sensible to draft towards the proposed rules, because a clause that already names a period, a territory and a concrete interest is both more likely to survive under the current law and easier to keep under the new one.

What to do now

For employers

Treat the motivation as the substance of the clause rather than as boilerplate. Write it for the specific job: name the information, systems, projects or client relationships the employee will have, explain why access to them creates a real competitive risk, and connect that to the duration and the scope you are asking for. Define what you mean by a competitor and by similar work, and set a territory. Keep the period proportionate to how long the employment will actually last; a restriction longer than the contract itself invites annulment. Re-sign the clause on every renewal and whenever the role changes materially, and consider whether a non-solicitation or confidentiality clause would in fact protect what you need to protect. Where the position genuinely justifies a restriction, agreeing a compensation for the restricted period strengthens the clause and reduces the chance of a court cutting it down.

For employees

Do not sign without reading the clause and its motivation. Ask what compelling business interest is being protected and how it relates to your job; if the answer is vague, so is the clause. Negotiate before signing rather than after leaving: the period, the territory, the definition of a competitor and a compensation for the restricted period are all negotiable, and an employer that wants you will usually move on at least one of them. If you already have a clause and a new job in prospect, check first whether the clause was validly agreed and motivated, then whether the interest still exists, and only then whether it is proportionate. Do not simply ignore it. A breach can trigger a penalty and a claim for damages, and starting the new job before the position is clarified turns a legal question into an employment problem for your new employer as well.

If a dispute is coming

Common questions about a non-compete clause in a temporary contract

Is such a clause always invalid

No. It is valid if it was agreed in writing with an adult employee and the clause itself states the compelling business interests that make it necessary. What is invalid is a clause without that motivation, or with a motivation so general that it says nothing about this job. The rule is a quality requirement, not a prohibition.

Does the clause still bind me if the employer chose not to renew the contract

In principle yes, because the clause is about what happens after the employment ends, not about who ended it. But the circumstances weigh heavily in the balancing exercise: a court that is asked to annul a clause takes seriously that the employer both declined to continue the employment and now wants to restrict where the employee may work. And where the contract ended because of seriously culpable acts or omissions by the employer, article 7:653 paragraph 4 BW bars the employer from relying on the clause at all.

How long may the restriction last

Dutch law currently sets no maximum. Clauses of six to twelve months are the most common, and courts regularly shorten longer ones or limit them geographically when they weigh the employee interest against the employer interest. The bill to modernise the clause proposes a statutory cap of one year, which gives a fair indication of where the ceiling is likely to settle.

Can my new employer be held liable

It can. An employer that knowingly takes on someone in breach of a valid non-compete clause, and profits from that breach, may commit an unlawful act towards the former employer and be liable for the resulting damage under article 6:162 BW. This is why new employers ask about existing clauses, and why an employee who conceals one creates a problem for both sides.

Is a clause in the staff handbook or the collective agreement enough

Generally not on its own. The clause has to be agreed in writing with the individual employee. A reference in a contract to a separate document containing the clause can work, but only if the employee expressly accepted that document in writing and it was actually made available before signing. A collective labour agreement cannot impose a non-compete clause on an individual employee in place of that written agreement.

Does the same rule apply to a self-employed contractor

No. Article 7:653 BW applies to employment contracts. A restriction in a contract for services is judged under general contract law, where the standards of reasonableness and fairness and, in some cases, competition law provide the limits. That said, if the working relationship in fact meets the requirements of an employment contract, the employment rules apply regardless of the label on the agreement.

How Law and More can help

A non-compete clause in a fixed-term contract stands or falls on the quality of its written motivation, and that is a drafting question before it is a litigation question. Our employment lawyers draft and review clauses for employers, assess whether an existing clause binds an employee who wants to move, negotiate waivers and settlements, and act in summary proceedings on both sides. If you are about to sign a contract with such a clause, or about to rely on one, contact Law and More before the position hardens.