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You can include a non-compete clause in your employee’s permanent employment contract to protect your business interests when they leave your employment. This clause prevents them from working for your competitor or from starting a similar enterprise after resigning. A non-solicitation clause forbids your employee to contact your clients after resigning.
What does a non-compete clause inlcude?
You can determine what to include in the non-compete clause. It may contain provisions such as:
- The kind of work it applies to.
- Competitors you do not want your former employee to work for.
- Restrictions on geographical areas.
- Applicable time period, usually 1 or 2 years after resignation.
- Possible penalties.
Please note: Do not forget to amend the non-compete clause when the employee changes position or if other major changes take place. For example, if your employee is given a management position with more responsibilities. Or if you expand your territory or the number of branches.
When is a non-compete clause valid?
A non-compete clause is only valid if:
- it is agreed upon in writing, for instance in a signed employment contract or in your general conditions
- your employee agrees in writing to this clause, for instance by signing the contract or a letter which refers to your general conditions
- your employee is 18 years old or over
- if your employee is a minor he or she has parental permission
When is a non-compete clause void?
You may not include a non-compete clause in a temporary employment contract, unless special circumstances apply. This could be the case when ‘legitimate business interests’ are at stake, which should be specified explicitly in the employment contract. Your employee could ask the district court if the non-compete clauses in the contract are truly necessary and legitimate. If you fail to properly substantiate the non-compete clauses, the district court may void the clauses.
Failure to comply with the non-compete clause
If your employee fails to comply with the non-compete clause, you can go to court. The court may force your employee to comply with the clause by imposing a penalty. You may also claim damages. The court will also take your employee’s interests into account. In doing so, it may decide the clause is (no longer) applicable.