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Restrictive Covenants in Belgium

1. Definition of Restrictive Covenants

As a general rule, all clauses, which are not compatible with the content of the said act, are null and void, insofar such clause limits the rights or aggravates the duties of the employee.

For some types of clauses, a legal framework is foreseen. One example provides that during the contract and after its termination, the employee must abstain from i) divulging manufacturing secrets, trade secrets and secrets pertaining to any matter of a personal or confidential nature, the knowledge of which the employee may have acquired in the exercise of his/her professional activity, and ii) performing or cooperating with any act of unfair competition. These two obligations result from the duty of good faith, which governs any contract under the rules of Belgian civil law.

Other types of clauses (e.g. place of residence clause for fire fighters) are not legally defined, but are nevertheless legal under certain conditions.

2. Types of Restrictive Covenants

(i) Non-Compete Clauses

As a consequence of the principle of good faith, the employee is prohibited from competing with his/her employer during the execution of the employment contract. A non-compete clause, which recalls this prohibition, may validly be inserted into the employment contract without any specific formality or condition.

For a non-compete clause to apply after termination of the employment contract, strict conditions have to be complied with. The clause must be in writing and is valid if the employee’s annual gross remuneration exceeds 66,441 EUR. There are further restrictions on its applicability if the annual gross remuneration does not exceed 66,441 EUR, as a CBA authorising it must be entered into at an industry or company level and the annual gross remuneration must in any case exceed 33,221 EUR (these amounts, applicable for 2016, are updated annually).

In general, a non-compete clause is valid if it is limited to activities similar to those presently performed by the employee and to a well-defined geographical area limited to the national territory, if the new employer is a competitor, and provided that the clause does not exceed 12 months.

Except for sales representatives, the clause must provide for the payment of an indemnity to the employee equal to at least 50 % of the salary corresponding to the duration of the non-compete provision. The clause is not applicable if (i) the employer terminates the contract during the first six months of employment, (ii) if after the first six months of employment, the employer terminates the employment contract with a notice period or an indemnity in lieu of notice, or (iii) the employee puts an end to the agreement on the basis of a serious breach committed by the employer.

Provided that some specific requirements are met, various deviations from the conditions of the general non-compete clause can be carried through (i.e., the ‘special non-compete clause’). This clause may only be used for certain categories of enterprises and for white-collar employees (except sales representatives) with specific functions.

(ii) Non-solicitation of customers

See IX. 2. (i)

(iii) Non-solicitation of employees

It is not uncommon to foresee a ‘non-solicitation of employees clause’ in employment contracts or separation agreements that entails a restriction not to approach employees of the (former) employer. In principle however, former employees are allowed to approach employees of the former employer, as long as such actions cannot be qualified as unfair competition (i.e. with the sole intent to harm the former employer).

3. Enforcement of Restrictive Covenants—process and remedies

It is customary to foresee the possibility of damage claims in case the employee would violate certain restrictive covenants. The enforcement possibilities for certain restrictive covenants are however defined by law. In case an employee violates the non-compete clause for example, the damage claim cannot be higher than the repayment of the indemnity awarded to the employee (see supra IX. 2. (i)) on top of indemnity equal to the same amount.

4. Use and Limitations of Garden Leave

Garden leave is as such not allowed under Belgian employment law, as it entails that the employee would not be allowed to perform his/her job, while this condition is deemed an essential element of every Belgian employment contract. A garden leave where the employee is exempt from performing his/her duties during the notice period, is only possible with the employees’ explicit consent. The unilateral decision of an employer to send an employee on garden leave, would grant the employee the right to claim damages or the contract could even be regarded as being terminated by the employer (constructive dismissal).

For more information on these articles or any other issues involving labour and employment matters in Belgium, please contact Chris Van Olmen, Partner at Van Olmen & Wynant (www.vow.be) at chris.van.olmen@vow.be
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