Recently appointed Dutch Prime Minister Rob Jetten is dipping back into the past for policy ideas as his minoritygovernment begins to set out its legislative agenda. It was announced on 29 June that the Modernization of the Non-compete Clause bill will finally be sent to the Council of State. This bill significantly alters the rules employers can use to impose non-compete clauses (NCCs) in an employee’s contract.
A parliamentary response to the issues surrounding non-compete clauses goes back to 2021, when the cabinet led by Prime Minister Mark Rutte, now NATO general secretary, commissioned a research study into how NCCs impact employees’ rights. Panteia, the research institute who carried out the study, found that NCCs were implemented sofrequently in contracts that it began to raise serious questions about Dutch freedom of labour rights. Panteia also found that companies find it harder to recruit, since a large share of prospective hires are tied down by NCCs that could hold up in court.
In 2023, Rutte’s fourth cabinet formulated the Modernization of the Non-compete Clause bill, which aimed to shift theNCC from a routine boilerplate clause into a tool employers can only use when there’s a genuine business need to protect. To that end, it caps clauses at a maximum of 12 months, requires employers to specify the exact geographical area the restriction covers, and – for the first time – obliges them to give a concrete, written justification of the compellingbusiness interest at stake, whether the contract is fixed-term or permanent. Employers can no longer simply let a clause sitdormant in a contract and enforce it later on a whim: they must explicitly invoke it in writing before employment ends, stating how long the restriction will apply, or it lapses automatically. And if they do invoke it, the cost is real – 50% of the employee’s last monthly salary for every month the clause is enforced, paid on time, or the clause falls away entirely.
The Rutte cabinet collapsed in July 2023, just weeks after this announcement, but the bill outlived the government that proposed it, reaching public consultation the following March under a caretaker administration. Then it simply stalled: the Schoof cabinet that followed never picked it back up. In the D66-VVD-CDA coalition talks that produced the Jetten government, it was finally put back on the table.
In a statement, the Ministry of Social Affairs and Employment explained that ‘research shows that the use of NCCs hasdoubled significantly. Currently, one third of employees are affected by them. Often there is no justification for this, as many of them do not work with trade secrets or customer data. [However,] employers often include them to prevent staff from leaving for competitors’.
Hans Vijlbrief, Minister of Social Affairs and Employment, added: ‘Modernizing the non-compete clause contributes tofairer work. This makes it easier for employees to switch jobs. Many people currently are afraid to take a next step, while many employers are desperate for new staff.’
During the 2024 internet consultation, employer groups VNO-NCW, MKB-Nederland and AWVN welcomed the bill’s intentions but pushed back hard on the numbers, arguing the flat 50%-of-salary payout was unreasonable and should instead scale with company size, while insisting client and staff non-poaching clauses are too mild to deserve the sametreatment as a full non-compete. Trade union CNV, meanwhile, called the reform a step forward but not going far enough – clauses would still trap workers who leave during their probation period or whose employer goes bust. Neither side has commented since June’s referral to the Council of State, but nothing suggests either has shifted ground. Nobody’s arguing the old system was fine; the fight is over cost, and who still slips through the cracks.
The government hopes to submit the bill to the House of Representatives by the end of 2026, once the Council of State has delivered its advice. Even then, it will still need to clear both chambers of parliament before becoming law – so it might once again fall victim to the governmental churn defining modern Dutch politics.
Written by James Turrell