19 May 2022 Non-competition clause in case the employee possesses sensitive and detailed business information
The non-competition clause in employment contracts is a so-called lawyers’ paradise. This week, we discuss a case in which an employee starts summary proceedings in order to suspend the non-competition clause. The employee argues that in his current job, he is unable to develop himself, both content-wise and financially. However, the employer argues that the employee has a great deal of knowledge and information that he can put to use at his new employer.
We regularly publish articles on non-competition clauses, since this topic is often discussed in case law. Section 7:653 (3) of the Dutch Civil Code gives the court the option of annulling a non-competition clause wholly or in part if, in relation to the employer's interest to be protected, the employee is unfairly disadvantaged by the clause. If that is the case, there may be grounds to suspend the non-competition clause in whole or in part in summary proceedings. This means that the judge will have to weigh up the interests of the employer against those of the employee.
About non-competition clauses in case of the relocation of the employer: SPEE advocaten & mediation | Uitleg geografisch bereik concurrentiebeding bij verhuizing werkgever.
Validity of the non-competition clause in case of successive employership: SPEE advocaten & mediation | Concurrentiebeding en opvolgend werkgeverschap.
On unfair prejudice against the employer: SPEE advocaten & mediation | Concurrentiebeding: onbillijke benadeling werknemer.
This week's case concerns an employee (43 years old) of Brightsight, a company in cybersecurity.
Employee has been employed since 1 September 2013. In 2016 he was promoted to another position and as of 1 January 2020 he was again promoted. The latter job change was confirmed by Brightside on 7 February 2020. Employee was then also presented with a new non-compete clause, which he signed on 6 January 2021.
What followed was a discussion about the employee's dissatisfaction with his remuneration at Brightsight. Eventually, the employee applied to join another employer, Riscure. The employee's non-competition clause was an obstacle to this new employment, as Brightsight wanted to invoke the non-competition clause. Negotiations took place, but were unsuccessful.
Arguments put forward by the employee
The employee therefore brought proceedings before the subdistrict court, requesting that the non-competition clause be suspended and the penalty for breaching the clause be reduced. His arguments? The non-competition clause significantly hinders him from working outside of Brightsight; the non-competition clause may not be used to retain staff but this is now happening.
The employee states that in recent years his employer has hampered his development opportunities (also contentwise) and that his salary development has stagnated, even though he is performing well. For this reason, the employee argues that he would be significantly better off with Riscure, both in terms of content (more opportunities to specialise) and remuneration. His interests should therefore outweigh the interests of Brightsight, according to the employee.
The employer's defence
Brightsight put forward a defence and disputed that the employee's career opportunities had been hindered. Brightsight also stated that it did operate in the automotive market, in which the new employer also operates.
Furthermore, Brightsight indicated that the interest of the employee in the new job should not outweigh its own interest. Furthermore, this employee has access to highly sensitive company information and detailed knowledge of Brightsight's products, clients and services. Therefore, Brightsight would like to prevent this information from reaching Riscure as a new employer. This is because Riscure is active on the same market as Brightsight and is a major competitor. If Brightsight's specific business-sensitive knowledge were to end up with Riscure, this would affect Brightsight's business in an unacceptable way and would be very damaging for Brightsight. It would also give Riscure an unjustified competitive advantage.
Judgment of the Subdistrict Court
The subdistrict court agreed with Brightsight that its interest should outweigh that of the employee. Brightsight has made it sufficiently plausible that it has a serious interest in enforcing the non-competition clause. The company has argued that this employee has detailed knowledge of the Brightsight products and services, price information, structure of margins and specific terms of delivery, he knows which business opportunities exist with existing and new customers and has also identified them, he is involved in strategic decisions, is aware of marketing strategies, has knowledge of product developments and of the way in which Brighsight serves its customers.
It is established that Riscure does not only focus on automotive, but that it can be regarded as a competitor of Brighsight in the full breadth of its field of activity. That is why Riscure has been mentioned as such in the non-competition clause. It is therefore not plausible that the (general) knowledge that the employee has about Brightsight could not be of interest to Riscure.
Brighsight's interest in protecting its business is counterbalanced by the employee's interest in taking a new direction in his career and fully dedicating himself to automotive at Riscure. It is sufficiently plausible that the position at Riscure is interesting for the employee, both substantively and financially. The employee's argument that his opportunities were being limited by Brightsight to such an extent that there was a compelling interest in leaving cannot be accepted. It has been established that when the position of automotive domain holder became available, this was offered to employee and that employee was able to follow a course in this field. Based on the above, Brightsight's interest in enforcing the non-competition clause should outweigh employee's interest in joining Riscure.
The claims of the employee are therefore rejected.
You can read the judgment here.
We recommend employers to pay due attention to the wording of the non-competition clause. Employees should of course be aware of what they are signing. After all, it is far from certain that a subdistrict court will always decide in favour of the employee, should proceedings arise. SPEE advocaten & mediation will be happy to help you with any questions you may have on this topic or on other topics of employment law.