The competition clause

A non-compete (or non-competition) clause is a clause in an agreement in which a party agrees not to engage in competitive activities after the contractual relationship ends.

The rules regarding the validity of a non-competition clause in Belgium depend on whether it is a non-competition clause in an employment contract or in another contract (such as an agreement with a self-employed person (freelancer), an agreement to transfer trade funds, etc.).

Below we discuss first the legal rules applicable to employment contracts in Belgium, and then the rules applicable to other contracts.

Given the many questions we receive on this topic, we have also prepared a FAQ with the most common concrete questions about the non-compete clause in Belgium.

The non-compete clause in employment contracts

General rules

When is there a non-compete clause in an employment contract?

Employment contracts are regulated in Belgium by the law of July 3, 1978 on labor contracts. The rules on non-competition clauses are found in Article 65.

By a non-compete agreement, the law means : the clause whereby the employee undertakes not to engage in similar activities when he leaves the enterprise, either by carrying on an enterprise of his own or by entering the service of a competing employer, which allows him to prejudice the enterprise, which he has left, by using for his own benefit or for the benefit of a competing enterprise the knowledge, peculiar to that enterprise, which he has acquired in that enterprise in an industrial or commercial field.

It follows from this definition that a non-competition clause can only be applied to employees who, upon leaving their employer's company, have acquired "industrial or commercial knowledge" specific to that company. This is a broad concept and may include financial or administrative knowledge. On the other hand, an employee who has, for example, an organizational function or a labor supervision function, does not acquire industrial and commercial content but only knowledge of a general nature that cannot be detrimental to the company he is leaving.

When is a non-compete agreement valid?

A non-competition clause is only valid in Belgium if it meets the salary condition. Moreover, if the non-competition clause satisfies the salary condition, it is only valid if it also satisfies a number of other conditions.

Pay condition

A non-compete clause is only valid for employee who have a sufficient annual salary.

• With an annual salary of less than 41,969 euros (amount 2024), a non-competition clause is not valid
• For annual wages between 41,9695 euros and 83,939 euros (amounts 2024), a non-competition clause is only possible for positions expressly provided for in a collective bargaining agreement. This is the case for PC No. 302 for the hotel industry.
• With an annual salary exceeding 83,939 euros (amount 2024), a non-competition clause is legally valid unless prohibited by a collective bargaining agreement

This takes into account the annual salary upon termination of the employment contract and should take into account all benefits acquired under the employment contract.

Importantly, the nullity of the non-competition clause based on the salary condition can only be invoked by the employee. The employee can thus fail to invoke the nullity and must pay the employer the compensatory damages (see below).

Other conditions

If the salary condition is met, then a non-competition clause is only valid in Belgium if the following conditions are met:

• It must relate to similar activities. Thus, a non-compete clause is void if it prohibits any activity at a competitor or if it does not expressly provide that it relates to similar activities.
• It must be geographically limited to that region where the employee can actually compete with his employer (taking into account the nature of the company and its radius of action) and must in any case be limited to Belgian territory
• It should not exceed 12 months from the day the employment contract ended
• It must provide for the payment by the employer of a sole and lump-sum compensatory indemnity, the amount of which must be at least equal to ½ of the gross salary corresponding to the duration of the non-competition clause, unless the employer waives the application of the non-competition clause within a period of 15 days counting from the termination of the employment contract.
• It must be set forth in writing (such as the employment contract or work rules accepted by the employee)

Again, it is only the employee who can invoke the nullity of the non-competition clause.

When does a non-compete agreement have no effect?

A non-competition clause has no effect in Belgium when the employment contract is terminated:

• During the first 6 months of the employment contract
• By the employer without urgent reason
• By the employee for an urgent reason

What if the employee violates the non-compete agreement?

If the employee violates the non-competition clause, he must first repay the compensatory indemnity paid to him by his former employer. Moreover, he must additionally pay identical amounts as compensation to his former employer. For example, if the employee received an amount of 15,000 euros, he must pay a total of 30,000 euros to his former employer.

However, the employee can ask the court to reduce the amount of the conventionally determined compensation. The judge will accede to this if the employee demonstrates that the actual damage suffered by the former employer is less than this fixed compensation (e.g., less than 15,000 euros) or that he did respect the non-competition clause for a large part of its duration.

In addition to paying compensation, the former employer can also have the former employee enjoined from complying with the non-competition clause possibly subject to a penalty payment (in summary proceedings before the president of the labor court).

What does the deviation clause mean?

What about the derogation clause for employees of international companies in Belgium?

Companies that have an international field of activity or important economic, technical or financial interests in international markets, or companies that have their own research service, may derogate from the above formulated rules on non-competition clauses.

However, this derogation only applies to those employees assigned to work which directly or indirectly enables them to acquire knowledge of practices specific to the company and the use of which, outside the company, could be detrimental to it.

However, such deviations must have been determined by the National Labor Council. This was done through CLA No. 1bis .

The rules for trade representatives

Employment contracts for commercial representatives in Belgium are subject to a different regime for non-competition clauses than for other employees.

An employment contract for sales representatives exists when an employee, the sales representative, undertakes for pay to locate and visit clients, for the purpose of negotiating and concluding business (excluding insurance), under the authority, for the account and in the name of one or more principals.

A non-compete agreement is banned when annual wages do not exceed a certain amount. This amount is indexed annually and is 36,785 euros (for 2022). This is the salary on the day the employment contract ends. To calculate this amount, all benefits acquired by the commercial representative under the employment contract must also be taken into account.

If the annual salary exceeds 36,785 euros, then a non-competition clause is admitted provided that:

• The non-compete clause relates to similar activities. Similar activities are those performed by the sales representative in a competing company. Thus, the criterion is not the activity of the competing company but rather whether the sales representative performs his activity in this competing company in the same department than as with his previous employer (i.e. a similar position).
• The non-compete clause does not last longer than 12 months
• The non-competition clause is limited to the territory within which the sales representative carried out his activity (with the former employer). If no precise territory is designated, the non-compete clause is null and void. If the non-competition clause covers the Benelux, but the sales representative was only active in East Flanders, the clause is null and void. In the same sense, a non-competition agreement is null and void if it does not refer to a territory but to certain customers or suppliers. The mere reference to the territory where the sales representative was active on the date of departure is valid, but the employer must provide proof of this territory.

The non-compete agreement must be in writing. Thus, an oral non-competition clause is void.

However, the non-competition clause has no effect (and thus cannot be invoked against the sales representative) when the employment contract is terminated:

• during the first 6 months of the employment contract
• after this 6-month period when the employer terminates the contract without an urgent reason or when the employee terminates the contract for an urgent reason.

Obviously, an employer can also waive the application of the non-compete clause for the sales representative at any time.

If the employment contract provides for a lump sum compensation in the event of a breach of the non-competition clause, this amount may not exceed a sum equal to 3 months' (gross) salary. There is debate in case law whether double vacation pay should be included in the calculation basis or not. If a higher amount is stipulated in the employment contract, the court should reduce this amount to 3 months' wages. In addition to paying compensation for the violation of the non-competition clause, the employee may also possibly be ordered to pay damages for unfair competition (in which case the former employer must prove his damages).

The rules for paid athletes

On paid athletes and their employers in Belgium, the law of February 24, 1978 on the employment contract for certain sportsman applicable.

Paid sportspersons are persons who undertake the obligation to prepare for or participate in a sports competition or exhibition under the authority of another person for wages exceeding a certain amount. The amount of this wage is indexed annually and is set at 11,040 euros for the period July 1, 2022 through June 30, 2023.

The law states that non-competition clauses in employment contracts with paid athletes are prohibited.

However, it is true that an athlete will not be allowed to participate in a paid sports competition or exhibition in the same series, category, division, etc. of the same sports branch during the current sports season when the employment contract has been terminated either by the employer for an urgent reason or by the athlete without invoking an urgent reason.

The non-compete clause in other agreements

Except for employment contracts, the legal terms of a non-competition clause are not regulated by law in Belgium. This means that it belongs to the so-called will autonomy of the contracting parties, to fill out this non-competition clause.

However, it determines Article II.3 of the Code of Economic Law That everyone is free to engage in any economic activity of their choice. This provision is of public policy and therefore opposes an unauthorized restriction of this freedom of economic activity. Therefore, a non-competition clause that imposes an unreasonable restriction on such competition, by activities, duration or territory is in principle void.

Conditions under which a non-compete clause is valid

In order to be legally valid and so as not to unduly restrict the freedom of competition, a non-compete agreement must meet a number of restrictions:

• Time limitation. A non-competition clause must always be limited in time. The maximum duration is a question of fact to be assessed on a case-by-case basis (such as the duration of the cooperation, the sector, the concrete circumstances). Case law generally sets the limit at 1.5 to 2 years.
• Territorial limitation. A non-compete agreement must be limited to a geographical area. It may not extend territorially beyond what is necessary. If a business is transferred in Ghent, there is no need to extend the non-competition clause to Germany on the part of the transferor.
• Activity limitation. The non-competition clause must accurately describe the prohibited competitive activities. In doing so, the clause must not go beyond what the other party needs. Someone who performed IT services can be prohibited from performing IT services, but cannot be prohibited from opening a bakery.

The non-compete clause in a commercial agency agreement

A commercial agency contract between a commercial agent and a principal does provide in Belgium for competition clauses (art. X.22 Code of Economic Law).

The non-compete agreement is valid only when:

• It was stipulated in writing
• It relates to the type of business with which the commercial agent was in charge
• It is limited to the geographical area or group of persons and the geographical area entrusted to the commercial agent
• It is limited in duration to a maximum of 6 months after the termination of the commercial agency agreement

However, the non-compete clause has no effect when the commercial agency agreement is terminated, either by the principal or the agent, without the latter being able to prove a serious deficiency on the part of the other or without the latter being able to point out exceptional circumstances that make any further professional cooperation between each other definitively impossible.

The presence of a non-compete clause in a commercial agency agreement creates the presumption in favor of the commercial agent that he has brought customers. However, the principal can rebut this presumption by providing contrary evidence.

A violation of the non-competition clause may be linked to a flat fee. However, this compensation may not exceed an amount equal to one year (calculated based on the average of the 5 previous years). However, the principal may, provided he proves the existence the extent of his disadvantage, demand a higher compensation.

Read more about the non-compete clause in commercial agency here.

Legal advice on a non-compete agreement?

Do you need legal advice from an attorney about a non-compete agreement? Do you want to start working for a competing employer or establish a competing company? Do you want to know if a non-compete clause is valid in Belgium or how to legally circumvent it?

Take contact with our attorneys specializing in non-compete agreements.