What (not) to do in a tight labour market

by Nadine van Pol

In today's market employers are busy filling many vacancies and at the same time retaining their existing staff. This occasionally leads to employers desperately grasping for any means possible to retain staff, which sometimes results in the improper use of legal remedies.

For instance, in the case of the Netherlands Supreme Court 17 June 2022, ECLI:NL:HR:2022:894, the employer tried to prevent his employee from leaving the company and going to work for a competitor by invoking the agreed non-compete clause. He thought invoking the clause would buy him time to find new replacement staff.

The actual purpose of such a clause is not to protect against the departure of an experienced employee to a competitor, but only against the impairment of the employer’s business assets by such a move. A non-compete clause may be set aside by the court in whole or in part. This is possible if, in relation to the interests of the employer to be protected, the employee is unfairly disadvantaged by that clause. A weighing of interests takes place.

The employer complained that the court of appeal had failed to appreciate that the employer's interest in buying time by invoking the clause to find new replacement staff in a tight labour market was not taken into account in the weighing of interests to be made. The employer argued the business operations and continuity of the company would be jeopardised to the detriment of the business. The Supreme Court disagreed and ruled that the employer needing a longer period of time to fill the vacancy due to a tight labour market could be taken into account in weighing the interests of parties. The clause is intended to protect the company from unfair competition, and not to bind employees. If the employee had left without joining the competitor, the ex-employer would have been faced with the same problem.

Binding employees through a non-compete agreement is a negative form of binding. It is more effective to bind employees in more positive ways. The tight labour market forces employers to reinvent themselves in these areas and be the best employer they can be to attract and keep employees. Let’s look at this as a positive development, because isn't that actually profitable for everyone?

Photo: EKH-Pictures - stock.adobe.com

Employment Law Labour Law Employment Law Netherlands Baat