Non-Solicitation Clauses in the Netherlands

In November last year, I posted a blog about non-competition clauses in employment contracts. More often than not, these clauses are accompanied by so-called non-solicitation clauses (Dutch: relatiebedingen). In short, these clauses forbid an ex-employee to do business with “customers, suppliers, or any other person, firm or corporation with respect to the relevant products and services delivered by the ex-employer.” To complete the triad, anti-poaching clauses are sometimes also included, which prohibit the ex-employee to “directly or indirectly solicit or recruit, or attempt to solicit or recruit, any employee, consultant or independent contractor of the employer to terminate employment or otherwise cease providing services to the employer or to work for a third party other than the employer.”

To what extent are these clauses valid? What possibilities are there to limit their scope or to get rid of them entirely?

Non-Solicitation = Non-Competition

Before we get into more detail, it is important to note that non-solicitation clauses are legally treated the same as non-competition clauses. That implies that the important verdict of the Dutch Supreme Court (Hoge Raad) I discussed in the November blog also applies to non-solicitation clauses. In short, the Hoge Raad ruled that a non-competition clause is not intended to bind employees to the company. An employer cannot simply want to retain the employee’s “knowledge and experience” with a non-competition clause. The fact that an employee learns and takes that knowledge with him is inherent to his departure, just as the new employer benefits from this. Only if the employee, through his position, is aware of essential relevant (commercial and technical) information or of unique work processes and strategies and can use this knowledge at his new employer, giving that employer a competitive advantage, can he protect that knowledge with a non-competition clause. Another example is the situation when the employee works so intensively with certain customers of the old employer that these customers switch to the new employer. This can also be limited with a (non-solicitation) clause.

Did you see that last sentence? A non-solicitation clause is the preferred way to limit the possibility of an ex-employee reaching out to former clients. However, the same legal limits apply. In case the ex-employees never had any dealings with certain customers/clients/suppliers, it is my opinion (there has been no case law since) that a solicitation clause, as formulated in the first paragraph, is no longer legally valid – it is too broad. The employer has to prove that the employee is either aware of “essential relevant (commercial and technical) information or of unique work processes and strategies” or has worked so intensively with certain customers of the old employer that these customers switch to the new employer.

In most cases, these requirements will not be met. Many employers are not aware of this. Almost weekly, I encounter non-solicitation clauses that do not pass the legal test (anymore). A final question I wish to address here is whether the non-solicitation clause is breached in case the former employee does not approach former clients himself but is approached by them. Much depends on the wording of the clause, but in most cases, the clause does not distinguish between both situations. Strictly speaking, the former employee is not “soliciting” when approached. However, discussions (and tempers) will undoubtedly rise if the former employee services a former client with whom he often had contact when he was still employed by his former employer. In case of doubt, it is wise to seek legal aid since the repercussions (fines) could be severe.

Anti-Poaching (anti-recruitment) Clauses

Less common than the non-competition and non-solicitation clauses is the clause that prohibits the employee from approaching the employer’s employees to induce them to terminate the employment contract with the employer – and to join the company with which the employee is now involved. The anti-poaching clause is often reserved for employees with a key position, but that does not have to be the case. After all, any employee can recruit.

The question arises whether an anti-solicitation clause must meet the same legal criteria that apply to the non-competition and non-solicitation clauses and whether the case law applicable to these two clauses also applies. Unfortunately, the case law is not yet clear.

If the employer wants to be on the safe side, the anti-poaching clause should comply as much as possible with the requirements that apply to non-competition and non-solicitation clauses. With a clause that is formulated too broadly, the employer runs the risk of violating certain fundamental rights. Much depends on the precise wording of the clause. This also applies, for example, to whether the clause is violated if the former employee does not approach his former colleagues but is approached by them. Strictly speaking, the employee does not recruit. However, the discussion can quickly arise regarding whether the ex-employee did not make contact himself. In a case before the Northern Netherlands District Court, the judge ruled that the employee had not violated the anti-recruitment clause. The employee had referred the ex-colleague to the recruiter of his new employer and had not been involved in the application process.

Conclusion

As always, prevention is the best cure. Take the time to read your employment contract carefully in advance and, if necessary, ask a legal advisor to analyze it. If you have signed your contract and wish to leave the company, the non-solicitation clause is often used by the employer as a bargaining chip in negotiations about your departure; sometimes, it is a watered-down version of the non-competition clause (with which the employer sometimes believes he is doing the employee a favor). Therefore, it is good to know that such a clause can be used to protect trade secrets or to retain specific customers with whom you have (had) contact but not to retain you in the company or to prohibit you from communicating with anyone with whom the company has had dealings.

If you are unsure about a successful outcome, please contact Flott.

On March 12 (7.00 -8.30 PM), I will discuss these and other matters live for Expat Republic. Admission is free. Keep an eye out on the ER website or LinkedIn. Don’t miss it!

For more information, please contact Ronald M. Beltzer, Attorney – Employment law specialist, at Flott Advocatuur.