A settlement agreement (VSO) often concerns more than just the severance payment and end date. Provisions such as the non-compete clause or non-solicitation clause play an important role. Many employees sign a VSO without realizing that a non-compete clause can hinder them in finding new work. That can have far-reaching consequences.
In this article, we explain what a non-compete clause entails, how this works in a settlement agreement, what negotiation options you have, and how a lawyer can help you with this.
What is a non-compete clause?
A non-compete clause is a provision in your employment contract that stipulates that after your employment ends may not work for a competitor or start a competing business yourself.
A non-solicitation clause is a variant in which, after your termination you may not maintain contact with customers or business relations of your (former) employer.
Non-compete clause and settlement agreement
When drafting a settlement agreement, the non-compete or non-solicitation clause may come up again.
Important points to consider:
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The clause generally continues to apply unless something else is agreed in the settlement agreement.
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In the negotiations, you can remove, limit or compensate.
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If your new job conflicts with the clause, this can lead to a fine or lawsuit.
Options during negotiations
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Removing the clause
Ask whether the non-compete clause can be removed from the agreement entirely. -
Limiting the clause
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Shorter duration (e.g., 3 months instead of 12 months).
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Smaller geographic area (e.g., only a region instead of all of the Netherlands).
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Restriction to specific clients or sectors.
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Compensation if upheld
If the employer wants to enforce the clause, you can demand compensation.
👉 Example: An employee was not allowed to work for a competitor for a year. The employer paid him three extra months of salary as compensation.
Real-world examples
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Example 1: An account manager wanted to switch to a competitor. In his VSO it was agreed that the non-compete clause would lapse, allowing him to start without any issues.
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Example 2: An employee received a more limited non-solicitation clause: he was only prohibited from approaching clients from the last six months. As a result, he was still able to start his own business.
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Example 3: An employee accepted that his non-compete clause would remain in force, but received an additional compensation of € 5.000 for this.
Checklist: non-compete clause in a VSO
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📑 Check whether the non-compete or non-solicitation clause is included in your employment contract.
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📝 Request removal or restriction in your VSO.
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💶 Negotiate compensation if it remains in effect.
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⚖️ Get advice from a lawyer before you sign.
Common mistakes
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Inadvertently signing while the clause restricts you in new employment.
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Not asking for a limitation or compensation with a strict clause.
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Thinking the clause automatically expires with a VSO – this is not the case.
Frequently asked questions (FAQ)
1. Does my non-compete clause also apply with a VSO?
Yes, unless the agreement states that it is removed or modified.
2. Can I have my non-compete clause waived?
Yes, you can negotiate it away or have it limited.
3. What happens if I work for a competitor anyway?
Then you risk a fine or legal proceedings.
4. Do I get compensation for a non-compete clause?
That’s possible, especially if the clause seriously restricts you.
5. Can a lawyer help with this?
Yes, a lawyer can negotiate the removal, limitation, or compensation of the clause.
Why Arslan Advocaten?
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Specialized in employment law and dismissal
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Experience with negotiations on non-compete and non-solicitation clauses
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Often achieve a more favorable outcome or additional compensation
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Assist with disputes over breach of the clause
Conclusion
A non-compete clause can seriously limit your career after termination. Therefore, it is crucial to address this point in a settlement agreement. Whether you want to remove, limit, or compensate it: negotiating almost always pays off.
Frequently Asked Questions
What is a non-compete clause and how does it affect me after leaving my job?
A non-compete clause prevents you from working for a competitor or starting a competing business after your employment ends. It can significantly restrict your ability to find new work in the same industry.
Can I negotiate the non-compete clause in my settlement agreement?
Yes, you can negotiate to remove, limit, or get compensation for the non-compete clause during settlement negotiations. It’s advisable to discuss these options with a lawyer to protect your interests.
What should I do if I believe the non-compete clause is too restrictive?
You should request to limit the scope, reduce the duration, or seek compensation if the clause remains enforceable. Consulting a lawyer can help you effectively negotiate these terms.
Why is it important to get legal advice before signing a settlement agreement with a non-compete clause?
A lawyer can review the clause to ensure it doesn’t unduly restrict your future employment and help you negotiate better terms or removal, preventing potential legal issues later on.