French employment contracts can specify that the employee will be bound by a non-compete and/or confidentiality obligation after the termination of the employment contract, although the French Supreme Court imposes conditions on the validity of a non-compete clause, including the need to pay compensation to the employee.
Non-compete and confidentiality obligations
When agreeing on an employment relationship, the employee also agrees to stay loyal throughout the performance of the contract. As such, working for a competing business or disclosing confidential information is prohibited.
However, this obligation ends when the employment contract is terminated for whatever reason. It is possible to specify that these provisions survive, subject to conditions.
It is possible to specify in the employment contract that the employee will be bound by a non-compete and/or confidentiality obligation after the termination of the employment contract. However, an employee who is no longer under an employment contract is, by definition, free to do as he or she pleases. Restricting the ability to work is a direct violation of a fundamental liberty, the right to work.
To ensure that this freedom can only be restricted, not removed, the French Supreme Court imposes conditions on the validity of a non-compete clause. The clause must be necessary to the protection of the company's legitimate interests; limited in time; limited within a specific geographical scope; must take into account the employee's specific position; and be compensated. If the clause does not meet all these requirements, it is unlawful and unenforceable.
The compensation allocated to the employee must not be trivial – it corresponds to a fair compensation for the violation of the right to work. It is also not possible to reduce the amount during the performance of the clause. The French Supreme Court has recently ruled that the prohibition on reducing the amount has no exceptions, even though it may be covered in collective bargaining agreements.
A confidentiality clause, on the other hand, does not have to attract compensation to be valid. The obligation to keep information secret does not violate the employee's right to work; it is legitimate because confidential information should not be disclosed to competing businesses. However, it should be noted that a confidentiality clause could, in fact, be a disguised non-compete clause. In this case, the clause would be illegal if the conditions set out above are not met.
In practical terms, an employee under an illegal non-compete clause could ask for damages. Until recently, the fact that the clause was illegal automatically caused harm to the employee. The French Supreme Court has recently ruled that, from now on, the employee must prove a real damage resulting from the illegal clause.
Even in the absence of a non-compete clause, or if it is invalid, an employee cannot be in direct competition with his/her former employer. The employer can still file a claim in the Tribunal if the employee is in unfair competition (such as soliciting clients of their former company, distributing a product with inside information disclosed, etc.) and receive damages for the harm caused.