OF NON-COMPETITION CLAUSES IN FRANCE
French case law regarding non-competition clauses
seemed well established. However, the French Supreme Court (Cour
de Cassation) recently changed the rules of the game.
it should be reminded that a non-competition clause is a provision,
which is inserted in an employment contract or in a collective
bargaining agreement, according to which an employee commits himself
not to work for one or several competitors of the company in a
limited time period, on a limited area and in defined fields of
activity, once the employment contract is terminated, no matter
the ground for termination. Non-competition clauses are applicable
as of the day of termination of an employment contract, i.e.
usually at the end of the notice period. Should there be no notice
period, this clause shall apply as of the day the employee actually
leaves the company.
of non-competition clauses
clauses shall be provided for in writing and agreed by the employee
concerned even though mentioned in an applicable collective bargaining
of a non-competition clause
to three very important rulings handed down by the French Supreme
Court on July 10, 2002 (Cass.soc. July 10, 2002 n°2723, 2724,
2725, RJS 10/02 n° 1119), a non-competition clause must comply
with five cumulative conditions, i.e. this clause must be essential
to protect the employer’s legitimate interests (1), shall
be limited to a specific time period (2), to a geographical area
(3) and shall take the characteristics of the employee’s
job into account (4) and, at last and more importantly, it must
provide for a financial counterpart (5). These conditions do protect
the freedom to work and will be examined hereinafter.
Non-competition clauses regarding menial jobs such as window cleaners,
handlers are never considered in the employer’s legitimate
interests (Cass.soc. May 14, 1992 Godissard c/ Soulhiol n°
89-45.300). Indeed, employers must prove that they need to protect
their clientele, a specific know-how, trade secrets etc. As a
result, only employees who acquired a specific knowledge, executives,
managers can be submitted to a non-competition clause.
3 and 4) A non-competition clause cannot prevent an employee
from finding another job and shall therefore be limited in terms
of time, area and field of activity. For instance, a French Court
declared null and void a clause, which prevented an employee from
working in the same field of activity as his/her previous company
for one year on the French territory (Cass. soc September 18,
2002 n° 2722 : RJS 12/97 n° 1369).
one of these conditions of validity not be fulfilled, French Courts
do not usually regard this clause as void but adapt it to the
circumstances of the cause. They may, for instance, reduce the
time limit or the geographic area.
To be valid, a non-competition clause shall contain a financial
counterpart. This condition was added in 2002 by the French Supreme
Court (see reference above).
numerous clauses agreed on before 2002 did not provide for a financial
counterpart, these clauses are, to date, theoretically void.
either a collective bargaining agreement set that non-competition
clauses shall provide for a financial counterpart and every employment
contract contained such financial counterpart, or the collective
bargaining agreement let employers choose whether or not a financial
counterpart should be provided for and few employment contracts
granted an indemnity to the dismissed/resigning employee.
though a number of non-competition clauses are, to date, deprived
of a financial counterpart, French Courts hardly ever consider
these clauses void and usually regard them as valid and indemnify
employees to make up for their absence (Cass. soc March 18, 2003
Dazy c/ Sté Net-O-Sol 734).
amount of this financial counterpart usually reaches one forth
to half “X” monthly gross salaries, X being the number
of months during which the employee must comply with his non-competition
obligation. Said amount is generally set with respect to the importance
of the limitations imposed on the employees.
counterpart remains due to any employee who found a new job in
compliance with this clause or to any employee who did not suffer
from any damage in connexion with this clause.
clauses in a group of companies
the framework of a group of companies, should an employee enter
into an employment contract with one subsidiary of the group (hereinafter
S1), the non-competition clause shall only target this S1 company.
Therefore, if the employee resigns/is dismissed from S1 and finds
a new job in another company whose activities are similar to those
run by the mother company and/or other subsidiaries of the group,
the non-competition clause will not be regarded as violated since
the activity of S1 differs from his new employer’s (Cass.soc.
May 22, 1995, n° 2243 PB, Magnaval c/ SA Fimedias, Bull.civ
V page 118, n°162).
the same way, should an employee be hired by a subsidiary of the
group (S1) and sent on secondment in other subsidiaries of this
group, the non-competition clause agreed upon with S1 will not
apply to the other subsidiaries of this group even though the
employee was, for some time, on secondment in these subsidiaries
(Cass.soc December 17, 1997, n° 4864 D, SA Roudière
c/ Bassi) .
following the violation of a non-competition clause
the one hand, should an employer fail to settle the financial
counterpart, his employee will no longer have to comply with his
the other hand, an employee, who breaches his non-competition
obligation is no longer entitled to his financial counterpart
and can be sentenced to reimburse the sum he received unduly.
However, has this employee complied with his non-competition obligation
for some time, he may keep the indemnity corresponding to this
until very recently, the former employer could have the new employment
contract, which violated the non-competition clause, terminated
thanks to an emergency procedure (procedure de référé).
This procedure was very effective compared to a regular procedure,
which usually takes from 9 to 18 months to obtain the termination
of the new employment contract entered into in breach of a non-competition
to the employers’ surprise, the French Supreme Court decided
on May 13, 2003 (Cass.soc May 13, 2003, SARL Vialatte Pneus c/
SNC Euromaster France) that a former employer cannot use this
emergency procedure to obtain the termination of an employment
contract, since this procedure was only designed to temporary
therefore lost an effective means of preventing their competitors
and former employees from adopting such behaviours.
the very important rulings of July 10, 2002, many non-competition
clauses are, to date, theoretically void and can be regarded as
potentially dangerous for employers, who should therefore negotiate
the new terms of these clauses as soon as possible. Indeed, employers
cannot unilaterally suppress non-competition clauses.
as French Courts tend more and more to protect employees, employers
must at least understand all the new rules to be able to react
properly on such issues in the future.