A Non-Compete Clause Was Agreed Upon, but Is It Still Invalid?

In employment law, the non-compete clause is considered a powerful tool for employers to protect their business interests. However, a legally valid clause does not automatically mean that it will hold up in court. This is evident from a recent ruling by the Arnhem-Leeuwarden Court of Appeals on October 31, 2023.

The court ruled that the non-compete clause for a technician at Smeba Brandbeveiliging could not be enforced, even though it had been legally and properly agreed upon. The reason? According to the court, the employee’s interests outweighed those of the employer.

The Case: From Smeba to the Competitor

The employee worked as a technician for Smeba Brandbeveiliging for over ten years. His employment contract included a non-compete clause that prohibited him from working for a competitor within two years of leaving the company. After resigning, he joined B.R.N., a smaller fire protection company.

Smeba alleged a breach of both the non-competition clause and the confidentiality clause, and sought substantial penalties: €58,500.00 in liquidated damages plus €500 per day for as long as the clause was breached. It also sought access to the employee’s new employment contract.

Court’s ruling: no commercial interest, but personal improvement

The court found that the employee held a primarily operational position, without any commercial responsibilities. While it was logical that he came into contact with customers in his role as a mechanic, this was not sufficient to conclude that he possessed relevant commercial knowledge or influence. Nor did his temporary assignment in the sales department provide any evidence of access to competitively sensitive information.

Furthermore, Smeba did not present any concrete evidence that customers had switched to the competitor, or that its business revenue had actually been harmed. The court also noted that the employer appeared to be more concerned with financial compensation than with the actual protection of competition-sensitive interests, in part because Smeba had offered the employee the option to buy out the non-compete clause.

On the other hand, the employee had convincingly demonstrated that his move would lead to a better work-life balance: a shorter commute, a four-day workweek, greater availability for the volunteer fire department, and a higher salary.

Balancing of interests favors the employee

Pursuant to Article 7:653(3) of the Dutch Civil Code, a court may declare a non-compete clause void if it unfairly disadvantages the employee in relation to the employer’s interest to be protected. And that is precisely what the court of appeals did in this case:

“The non-compete clause restricted the employee’s right to freely choose his or her employment, without Smeba being able to demonstrate a sufficiently compelling interest to justify it.”

The claim based on the confidentiality clause also failed. There was no evidence that confidential information had been disclosed to third parties or misused.

What does this mean for employers?

This ruling serves as a clear reminder that a non-compete clause should not be an end in itself. Employers should ask themselves:

Is there actually any competitively sensitive information or customer data involved?
Is the non-compete clause proportionate, or does it unnecessarily restrict the employee’s freedom to pursue a profession?
Are there any concrete indications of damage or a risk to business operations?

Furthermore, conduct prior to legal proceedings—such as offering a settlement—may be viewed negatively by the court when weighing the interests involved.

Conclusion

A non-compete clause is not a standard tool for retaining employees. It must be aimed at protecting legitimate business interests. This ruling shows that the court takes a critical look at the clause’s content, the employee’s position, and proportionality.

Employers would be wise to provide a clear justification for every non-compete clause, enforce it carefully, and use it only when it is truly necessary.

This blog was written by Stijn Blom, Esq., an employment law attorney at Arbeidsadvocaat.nl B.V. Stijn has extensive experience in employment law and assists employers and employees on a daily basis with a wide range of employment law issues. From dismissal cases to drafting watertight contracts and policies—with his practical and personalized approach, he helps employers and employees move forward. Want to learn more? Visit Stijn’s page.

Arbeidsadvocaat.nl is happy to help you if you have any questions about a non-compete clause. Please feel free to contact us .

April 2025