1. Legislative framework
On 31 October 2022, the Belgian State Gazette published the Act of 7 October 2022 “on the partial transposition of Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union.” This “Law on Transparent and Predictable Working Conditions,” which entered into force on 10 November 2022, pays great attention to detail in exclusivity clauses and considers the wishes of employees to combine several jobs.
2. One is an exclusivity clause, but another not
If an employment contract does not contain an exclusivity clause by now, then the employee is not prohibited from performing non-competing activities outside the working time. Nor is it (in principle) forbidden to plan or prepare to perform a competing activity, for example, when a worker applies for an enterprise number with the Crossroads Bank for Enterprises in anticipation of starting his or her own self-employed business. But effectively competing activities are not allowed, even if there is no exclusivity clause in the contract.
If the contract does have an exclusivity clause, it could also prohibit the worker from performing a non-competing activity even if it’s done outside the working time. In this scenario, which is in its strictest form, the exclusivity clause can compel the employee to devote his or her time and energy exclusively to the employer throughout the term of the employment contract and not perform any other professional activities, either as a self-employed contractor or employee, regardless of whether the work competes with the employer or whether the work took place outside the working time. Regarding the validity of such absolute exclusivity clauses, case-law on this has already been diverging.
There are different degrees of restraint, of course. In a more downplayed version, the clause prohibits the employee from performing any competing activities throughout the term of the employment contract. This exclusivity clause is actually nothing more than a contractual stipulation of Article 17(3)(b) of the Employment Contracts Act.
3. Fundamental right to parallel employment
Article 20 of the Law on Transparent and Predictable Working Conditions reads: “the employer may not prohibit the employee from taking up employment with other employer or employers outside his or her working schedule, unless this is permitted by law, or subject him or her to adverse treatment for doing so.”
In principle, every person in Belgium has the freedom to seek work. This has been enshrined in the Decree of Allarde since the French Revolution. This rule is endorsed in Article 20 of the new Law whereby the employer does away with the absolute exclusivity clause and resolutely chooses an alternative form of it.
Employees therefore, in principle, have the right to work for different employers at the same time, but they are not completely free to take up work with any employer.
The restrictions to an employee’s freedom remain the following: (i) the performance of competing activities or acts of unfair competition are not allowed, and (ii) in the second job, the employee may not use any business secrets or secrets that he or she learned of in the performance of the first job.
5. Exclusivity clause 2.0
The possibilities of concluding an exclusivity clause with an employee have thus become limited, but this does not prevent us from drafting a more desirable (an adapted) version. Absolutely not.
First, the new legislation can also prohibit an employee from working for a competitor, even if it is fair competition. The employer does nothing wrong if it stipulates this in the employment contract and, if appropriate, emphasizes explicitly that breaching it can lead to the employee’s being dismissed for urgent cause and/or imposed to pay lump-sum compensation to the employer.
Even for non-competing yet related activities, it is best to stipulate rules concerning them in the employment contract. The new Law does not prevent the employer from demanding prior notification from the employee for performing additional related activities, however. After all, this notification gives the employer the possibility to assess whether the activity actually amounts to competition or not, or whether it leads to any disclosure of business secrets.
As regards related activities (whether competing or not) that the employee performs as a self-employed contractor, it seems justifiable that Article 20 does not apply since the employer cannot prohibit the employee from working for himself or herself but from working “for another employer.” But this will eventually depend on what case-law will have to say about it.
6. Prohibition of adverse treatment
To illustrate, let’s say that you hire an employee to work part-time. You can no longer prohibit him or her from performing another job outside the part-time working schedule, except if it concerns a competing activity. An IT specialist cannot work part-time for IT company X and also part-time for IT company Y, but he or she can certainly teach IT or give IT training.
Neither may the employee be treated adversely because of the fact that he or she has parallel jobs. The employer may not fire this person or anticipate dismissal for this reason. If the employee succeeds in proving that he or she was treated adversely, he or she can seek lump-sum compensation equal to 6 months of his or her gross wages.
7. Check your employment contracts and company rules & regulations
In short, the exclusivity clause is definitely not longer. We advise that you include in the employment contract an adapted clause that continues to prohibit competing related activities and that also requires that the taking up of non-competing activities be subject to the necessary restrictions and obligation to notify the employer.
Do you have to delete or replace all the exclusivity clauses that exist now? No. These become only unenforceable (or partly unenforceable) under the new Law. So if an employee does perform a non-competing activity after working hours while the employment contract forbids it under an absolute-exclusivity clause, breach of this clause can no longer justify a dismissal for urgent cause.
This is not all, of course. The legislature also provides for a level 2 criminal sanction if Article 20 is violated. The employer can be fined €400 to €4,000 (criminal fine) or €200 to €2,000 (administrative fine) if it insists that the contract include an absolute-exclusivity clause.
In new contracts, we naturally advise that such type of invalid clauses be removed, and we can provide you with an adapted version. In any event, you should check your employment contracts and company rules & regulations thoroughly after the recent wave of new labour law legislation in the last months.