Implementation of the Directive on transparent and predictable working conditions (part 2): the prohibition of ancillary activities

On August 1, 2022, the Law Implementing the EU Directive on Transparent and Predictable Terms of Employment will (most likely) take effect. This blog is the second in a series of blogs explaining the main changes from that bill one by one.

This second blog addresses the changes regarding the prohibition of ancillary employment. Many employers use a side work clause in their employment contracts. As of Aug. 1, 2022, the side work clause cannot be invoked without good cause.

The ban on ancillary activities before the bill's entry into force

Ancillary work is work that an employee performs in addition to his work while employed by his employer. Consider, for example, the construction site worker who does some side work at a neighbor's house after his regular work. An employer may have an interest in prohibiting these activities.

Ancillary activities and adequate rest

Employers have a duty of care to their employees. Part of that duty of care includes, for example, fulfilling its obligations under the Working Hours Act, such as ensuring adequate rest. An employee who performs ancillary activities may possibly get in trouble with those rest periods. An ancillary activities clause can offer a solution.

Other reasons for banning ancillary activities

Incidentally, other reasons may also underlie the consideration of prohibiting ancillary activities. Examples include potential conflicts of interest or the protection of trade secrets. Many employers therefore include an outright ban on ancillary activities in the employment contract.

The clause is often coupled with a clause, in which ancillary activities are allowed when the employer gives permission. On this basis, therefore, the employee may not perform any kind of ancillary activities, without the employer's prior consent. Thus, in this way, employers retain control over the (ancillary) activities of their employees.

The ban on ancillary activities after the bill enters into force

Thus, the current form of the ban on ancillary activities has far-reaching consequences for the employee. An employer can easily refuse to allow an employee to perform ancillary activities. However, new European regulations and subsequent Dutch legislation throw a spanner in the works of the employer.

Objective justification

As of August 1, 2022, the law contains a new article regulating the ancillary activities clause in the employment contract. This article provides that an ancillary activities clause that prohibits or limits the employee's ability to perform ancillary activities is null and void. This is only different if the employer can provide an objective justification for the prohibition.

Examples of objective justification

Examples of objective justifications are:

• employee health and safety;
• protecting the confidentiality of business information;
• the integrity of government services;
• or avoiding conflicts of interest.

Incidentally, these are not the only possible objective justifications. Other justifications may also arise during the course of employment.

Establishing afterwards

The Dutch implementation legislation provides that these objective justifications need only be determined after the fact. As a result, an employee still does not know in advance where he stands. For employers, however, it is also difficult to foresee what interests will play a role in the future. After all, an employee may not decide to perform outside work until years after the employment contract is concluded.

Penalty for lack of objective justification

The "penalty" for the lack of objective justification is nullity of the side employment clause. This means that the clause is invalid. An employer cannot then invoke the clause, leaving the employee free to perform his or her ancillary activities.

Conclusion 

As of August 1, 2022, enforcement of an ancillary employment clause becomes more difficult. Employers would do well to check in advance whether the ancillary activities clause in their employment contracts complies with the new regulations. Including a reporting obligation for the employee is highly recommended in this regard. It is then up to you as an employer to assess whether you can refuse certain ancillary activities on the basis of an objective justification.

The employment contract used by your company may no longer be up to date after the bill comes into effect. Please contact us so that we can reassess and update your employment contract in accordance with the (new) regulations.