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:
The clause generally continues to apply unless something else is agreed in the settlement agreement.
In the negotiations, you can remove, limit or compensate.
If your new job conflicts with the clause, this can lead to a fine or lawsuit.
Options during negotiations
Removing the clause
Ask whether the non-compete clause can be removed from the agreement entirely.Limiting the clause
Shorter duration (e.g., 3 months instead of 12 months).
Smaller geographic area (e.g., only a region instead of all of the Netherlands).
Restriction to specific clients or sectors.
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
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.
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.
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
📑 Check whether the non-compete or non-solicitation clause is included in your employment contract.
📝 Request removal or restriction in your VSO.
💶 Negotiate compensation if it remains in effect.
⚖️ Get advice from a lawyer before you sign.
Common mistakes
Inadvertently signing while the clause restricts you in new employment.
Not asking for a limitation or compensation with a strict clause.
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?
Specialized in employment law and dismissal
Experience with negotiations on non-compete and non-solicitation clauses
Often achieve a more favorable outcome or additional compensation
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.