France: Temporary Violation of a Non-Compete Clause Frees Employer From Any Further Payments

In France, many collective bargaining agreements impose the mandatory monthly compensation when companies decide to apply a non-compete clause (which can be as high as ¾ month’s salary). Also, it is not always possible for an employer to unilaterally waive the non-compete clause when an employee leaves the company, except when this is provided for in the employment contract.

Previously, if an ex-employee did not respect the non-compete clause and then decided to respect it, the employer had to continue to pay the indemnity due for the time the employee had respected it. This is no longer the case. The indemnity is forfeited as soon as an ex-employee ceases to respect the clause.

Key Action Points for Human Resources and In-House Counsel

Check if the collective bargaining agreement that automatically applies to your company’s activity provides for any special terms regarding non-compete clauses, and ensure that employment contracts are correctly drafted on this topic. Also, ensure that this topic is reviewed before an employee leaves the company.