THE BOTTOM LINE
- Aggressive post-contract clauses are risky: Companies using long restriction periods (e.g., three years) in freelancer and intermediary contracts face a high risk of them being deemed unenforceable by Dutch courts.
- ‘Reasonableness’ is king: A court will look beyond the letter of the contract to assess fairness, considering factors like the time elapsed since the original engagement, the fees already paid, and the balance of power between the parties.
- Exorbitant penalties can backfire: Suing for disproportionately high penalty clauses can lead to a minimal award, with the court drastically reducing the penalty and potentially ordering each party to bear its own legal costs.
THE DETAILS
A recent dispute before the Rotterdam District Court offers a critical lesson for businesses that engage freelancers through intermediaries. The case involved an intermediary, Olympus Bouw B.V., which had placed a freelance construction worker with two end-clients. The intermediary’s agreements with the freelancer contained a clause preventing him from working for those same clients for three years after the engagement ended, unless he continued to pay a 15% commission to Olympus and its factoring partner, Activum.
When the freelancer took on short-term assignments with the same clients—one and a half and two and a half years later, respectively—Olympus sued, demanding over €73,000 in contractual penalties.
The freelancer argued that the restriction was an illegal impediment under the Dutch law governing temporary agency work (the Waadi) and that, in any event, it was fundamentally unfair. The court quickly dismissed the Waadi argument, noting a crucial technicality: the law applies when the intermediary is paid by the end-client. In this case, the freelancer himself paid the intermediary’s fee, so the arrangement fell outside the scope of that specific legislation. This left the core question of whether the contract clause itself was enforceable under the general principles of Dutch contract law.
Here, the court’s decision hinged on fairness, siding decisively with the freelancer. It ruled that enforcing the three-year restriction and the associated penalties would be “unacceptable according to the standards of reasonableness and billijkheid (fairness).” The judges highlighted several key factors: the significant time that had passed since the original placements, the short duration of the new assignments, and the clear imbalance in expertise between the company that drafted the contract and the individual freelancer. Crucially, the court also noted that the 15% commission the intermediary had charged during the initial contract was “very generous,” suggesting the firm had already been well compensated for its services.
Consequently, the court voided all penalties related to the work that began over two years later and drastically reduced the penalty for the other engagement from a claimed €40,000 to just €4,000.
SOURCE
Rechtbank Rotterdam
