The written requirement of the non-solicitation and non-compete clause: what's the deal?

An employer obviously does not want to give away his carefully built up customer base and trade secrets. To prevent an employee from subsequently using the knowledge and network he gains from one employer with a competitor, the employer can agree a non-compete or non-solicitation clause with the employee. A non-competition clause prohibits the employee from working for a competitor within a certain geographical area for a certain period of time. A non-solicitation clause prohibits the employee "only" from approaching customers of the former employer after employment.

If the employer includes such a clause in the employment contract, it interferes with the employee's fundamental right to free choice of employment. Not surprisingly, the law imposes strict requirements for the validity of the clause. When entering into it, the employee must be well aware of its content, as well as its hindering consequences. Therefore, it must be agreed upon in writing (also known as the "in writing requirement"). If this is not done properly, the clause is not valid and the employer is left empty-handed.

On Friday, March 3, the Supreme Court ruled in a case that gives cause to pause for thought on the answer to the question of how it was again about that requirement of written form. Do clauses always have to be included in the employment contract, or does a clause in an internal regulation, the collective bargaining agreement or an e-mail also suffice?

The writing requirement in case law.

In 2008, the Supreme Court already ruled on the written requirement of a non-competition clause. This requirement is met if the clause is included in another document, such as regulations or a collective bargaining agreement. In that case, the document in question must be appended to the employment contract, or the employee must expressly state in the employment contract that he agrees to the clause. This is to ensure that the employee is familiar with the content. It was unclear whether this also applies to a non-solicitation clause.

In the case recently before the Supreme Court, the personnel regulations containing a non-solicitation clause had been declared applicable to the employment contract. The employer claimed payment of a penalty of no less than €247,218.99 because the employee had allegedly violated, among other things, the non-solicitation clause. The employee, on the other hand, argued that the non-solicitation clause would not be valid because it had not been agreed with him in writing. Indeed, the personnel regulations had not been handed to him when he signed the employment contract, so he could not have taken cognizance of the clause.

Since the employer was unable to prove otherwise and the employee had also not expressly agreed to the non-solicitation clause in the employment contract, the conditions the Supreme Court had imposed on the requirement in writing had not been met. According to the Supreme Court, these requirements therefore also apply to the non-solicitation clause. In this case, the non-solicitation clause had indeed not been validly agreed. The employer could whistle for the fine.

What exactly to look out for?

The employer includes a non-solicitation or non-compete clause for a reason. It is therefore very important that the clause meet the following strict written requirements, otherwise it will not be valid:

1. Exactly the same requirements apply to the non-competition clause and the non-solicitation clause;
2. In the case of fixed-term employment, the clause must always be in the employment contract itself and must also be extensively motivated;
3. To avoid problems, it is wise to include the clause in the employment contract itself even in cases of employment for an indefinite period of time. If the clause is included in a regulation or collective bargaining agreement anyway, the relevant document should be attached to the employment contract or the employee should declare in the employment contract that he agrees with the clause. E-mail correspondence in which the employee declares that he agrees to the clause is also sufficient;
4. If the employee is given a new employment contract, the non-competition clause must be re-agreed in writing, even if there is successive employment or a continuation of the previous contract;
5. If there are significant changes, such as if the employee's position changes, if the employer expands its operations, or if there is a takeover, the clause may become more onerous for the employee and must be renegotiated in writing.

Although the Supreme Court ruling of March 3 brings little new under the sun, it once again emphasizes the importance of properly including a non-solicitation or non-competition clause in the employment contract. Do not let the agreement of such a clause be in vain!