A daily briefing on European HR, labour law and compliance developments for SME HR teams across the EU, UK, Switzerland and the Nordics.
Top story: Netherlands moves to overhaul non-compete clauses with mandatory compensation
The Dutch government sent the Modernisation of the Non-Competition Clause Bill to the Council of State for advice on 29 June, setting in motion the most significant reform of post-employment restrictions in the Netherlands in decades. If enacted, the bill would fundamentally change how employers use non-compete and non-solicitation clauses in employment contracts.
Four provisions stand out. First, non-compete clauses would be capped at 12 months. Second, employers would have to specify the geographic scope of the restriction and justify a “compelling business interest,” even in indefinite contracts (currently only required for fixed-term contracts). Third, and most consequentially for SMEs, employers invoking a non-compete clause would be required to pay the departing employee compensation of 50% of their last monthly salary for each month the restriction applies. If the employer fails to pay by the last day of the contract, the clause becomes unenforceable, though the compensation obligation remains. Fourth, the clause would not apply where the contract ends due to the employee’s serious misconduct.
Employer groups pushed back during the 2024 internet consultation, arguing that a flat 50% payout was disproportionate and should scale with company size. Trade union CNV called the reform a step forward but said it did not go far enough. The government aims to submit the bill to the House of Representatives by the end of 2026.
What to do: Dutch employers who rely on non-compete clauses should begin modelling the financial cost of the proposed compensation obligation now. Review existing clauses for geographic specificity and business-interest justification, as both will be required regardless of contract type. The bill is not yet law, but the direction is clear, and contracts signed today may need to be renegotiated once the rules take effect.
Also developing
Germany: The coalition committee’s 34-point labour reform package, agreed on 1 July, includes two provisions not yet covered in this briefing. From 1 January 2027, employers will be permitted to terminate employees earning more than approximately €177,450 per year (1.75 times the pension insurance contribution ceiling) in exchange for a statutory severance payment of 12 to 18 months’ salary. Separately, fixed-term contracts without an objective reason will be allowed for up to four years with up to six renewals, significantly relaxing the current two-year/three-renewal limit. The provisions are expected to apply primarily to new contracts signed from 2027 onward. What to do: No immediate action required, but employers with high-earning staff or heavy use of fixed-term contracts should factor these changes into workforce planning and compensation design for 2027.
Denmark: On 18 June, the Danish Supreme Court ruled that temporary agency workers covered by the Act on Temporary Agency Work cannot simultaneously be covered by the Salaried Employees Act, even where assignments run for extended periods. In one case, assignments lasting roughly 25 months with seven extensions were upheld as genuinely temporary. In a second, a 3.5-year assignment with four extensions was found to lack objective justification: the agency was ordered to pay notice-period salary, sick pay and compensation under the Fixed-Term Employment Act. The ruling clarifies that duration alone does not determine whether an assignment is temporary, but agencies and host companies must be able to justify each extension. What to do: If you use agency workers in Denmark, audit the duration and extension history of current assignments. Any assignment running beyond 24 months should have documented objective justification for each renewal to avoid reclassification risk.
Ireland: The Workplace Relations Commission continues to signal its willingness to pierce the corporate veil in worker-status disputes, as highlighted in a July 2026 Law Society Gazette analysis. In Lingard v Randridge International Ltd, the WRC looked behind a limited-company invoicing arrangement, applied the Supreme Court’s five-factor Karshan framework and held that the contractor was in fact an employee entitled to unpaid wages. The decision follows several similar rulings and aligns with the revised Code of Practice on Determining Employment Status published in November 2024. It underscores that in Ireland, engaging an individual through a personal limited company does not, by itself, prevent a finding of employment status. What to do: Irish employers using contractors who provide services personally through their own limited companies should review those arrangements against the Karshan five-factor test. Pay particular attention to relationships that have evolved over time: a contract that began as genuinely independent may now look like employment on the ground.
On the radar
EU, 2 August (previously covered): The AI Act’s Article 50 transparency obligations and Article 4 AI literacy duty take effect on Saturday. Employers using AI in recruitment, screening or performance management must have interaction disclosures in place. The full high-risk compliance regime has been postponed to December 2027.
Belgium, 1 August (previously covered): The one-week notice period during the first six months of employment takes effect tomorrow for new indefinite-term contracts.
UK pay transparency consultation (previously covered): Closes 27 October 2026.
EU Platform Workers Directive (previously covered): Member states must transpose by 2 December 2026.
Sources
- Baker McKenzie Global Workplace Insider: Reform of Dutch non-competition clauses (July 2026)
- Baker McKenzie Global Workplace Insider: Restrictions on Dutch non-competition clauses (July 2026)
- Palthe Oberman: Bill Modernization of Non-Competition Clause
- Chambers Expert Focus: Navigating Dutch non-compete clause reforms
- CMS: Labour and employment law 2026, the reform package for economic recovery and employment
- Ogletree Deakins: Germany’s 2026 labor law reforms, a program for growth and employment
- DLA Piper: Nordic employment law bulletin, July 2026
- Staffing Industry Analysts: Danish Supreme Court clarifies temporary work limits
- Law Society Gazette: WRC pierces corporate veil on worker status (July 2026)
- A&L Goodbody: Lifting the veil, WRC willing to look behind a corporate structure to determine a contractor is in fact an employee
Europe HR Compliance Pulse is an informational summary of publicly reported legal and regulatory developments. It is not legal advice. Always confirm obligations for your specific situation and market with a qualified adviser.
