In the assignment contract between the client and the contractor, a non-competition clause can be agreed – just as with employers and employees – so that the client can protect its business interests when the relationship with the contractor ends.
In this article we will discuss the possibilities of agreeing a non-competition clause between the client and the contractor. In addition, we will discuss the possibility of enforcing the non-competition clause. Finally, the prohibition of obstructions in the Waadi (Workforce Allocation Act) is discussed.
Non-competition clause in assignment agreement
A client may agree a non-competition clause with its contractors in order to protect its business interests. This non-competition clause ensures that a contractor cannot enter the service of a competitor without permission. Different rules apply to this non-competition clause than to the employment contract. After all, a contractor is not an employee.
Requirements for a non-competition clause in an assignment contract
Case law provides a similar test for assessing the legal validity of a non-competition clause. A non-competition clause is not automatically valid. It must be in writing and may not violate the fundamental right of free choice of employment (Article 19 of the Constitution). This may be the case if the duration of the clause is unnecessarily long or otherwise too broadly formulated. The clause can be restricted by invoking reasonableness and fairness.
Enforcing non-competition clause after termination of assignment contract?
After the termination of the assignment contract, the former contractor, if a non-competition clause has been validly agreed, is obliged for a certain period of time to refrain from certain activities for competitors of the client. If the contractor fails to comply with this, the client may enforce the non-competition clause.
Compliance can first be sought amicably by sending a summons. If a penalty clause is linked to a breach of the non-competition clause, a claim can also be made for the penalties. Furthermore, the employer can claim compliance and demand the fines in legal proceedings.
Does the ban on obstructions apply to a non-competition clause in an assignment contract?
Article 9 of the Waadi contains a ban on obstructions. The ban on obstructions means that a temporary employment agency or secondment agency may not impose restrictions on a worker to avoid entering into an employment contract with the hirer after the end of the posting. The contract for professional services under Article 7:400 of the Dutch Civil Code is not covered by the Waadi. However, Article 9 of the Waadi, which contains the prohibition on obstructions, may under circumstances be applicable. This was the case in proceedings before the District Court of Noord-Nederland (ECLI:NL:RBNNE:2021:3274).
The Court ruled in the aforementioned case that it follows from the case law of the European Court of Justice and the Supreme Court that the Temporary Agency Work Directive and the Waadi also apply to workers who have an employment relationship with a temporary agency, not being an employment contract. In short, an independent worker who works under a contract for services and is posted to a user company to work under the management and supervision of that user company is also covered by the Temporary Agency Work Directive and the Waadi. In this case this meant for the client that the agreed non-competition clause could not be invoked. The non-competition clause in fact blocked the contractor’s ability to work for the hirer after the end of the assignment and was therefore null and void.
Want to know more about the non-competition clause in a commission contract?
A non-competition clause can therefore be validly agreed with a contractor. However, in some situations it cannot be invoked. This is the case if the clause does not meet the requirement of being in writing or in accordance with the principles of reasonableness and fairness, but also if the prohibition on obstructing business is applicable to the contractor.
Want to know more about the non-competition clause and how it can be enforced by clients and employers. Feel free to contact the employment lawyers of LVH lawyers in Rotterdam.
