French employers should be more than usually careful when drafting restrictive covenants in light of a recent decision of the French Supreme Court.
In Sodexho v Roinet the Court confirmed that any clause purporting to restrict the ability of a former employee to solicit clients and customers post-termination must be accompanied by a compensation payment in order to be valid. In this particular case the ex-employee was a chef whose ex-employer, Sodexho, was trying to stop him working for any of its customers for two years within a 130 kilometre radius of his former place of work. The Court held that this amounted to a restraint on the chef’s ability to work and ordered the employer to pay €30,000 by way of compensation.
The Supreme Court’s decision is in line with an earlier decision in 2002 (Salembier v La Mondiale, Moline v MSAS Cargo International and Barbier v Maine Agri SA) in which it held that non-competition clauses will only be enforceable if accompanied by a financial payment to compensate the ex-employee for the restriction on his ability to work and earn a living.
There is very little case law available on what constitutes an appropriate level of compensation but collective agreements typically set the level at between 33 and 50% of an employee’s monthly salary