As many readers will know, non-compete clauses in employment contracts are only valid in France if, among other conditions, an employee receives a financial consideration of 40 to 60% salary depending on the sector and the role for the duration of the restriction. But do confidentiality clauses need to be subject to the same treatment?

The recently published decision of the High Court (SNC Adex v/ MD dated 15 October 2014) confirming that a confidentiality clause does not require any financial compensation will be met with a sigh of relief by employers employing staff in France.

“A confidentiality clause does not prevent an employee from finding another job”

This decision, though not entirely surprising, is important firstly because rulings by the High court on confidentiality clauses are rare and can be quoted by employers as authority for cases before other courts. Secondly, the circumstances of the employee were particularly interesting: the employee had argued that following his redundancy as Marketing Director (industrial explosive division), the confidentiality clause in his employment contract effectively prevented him from finding another role because he had always worked in the same niche sector where his skills are rare. He also claimed the confidentiality clause was particularly restrictive as it was neither limited in time nor geographical scope. All these circumstances, the employee argued, meant he was prevented from working for a competitor, and therefore in the same way that a non-compete clause operates, the contractual restrictions imposed on him should only be enforceable if he received an adequate financial compensation.

Not so. The high court disagreed with the employee’s reasoning and declared that the clause did not prevent the employee from finding another job, it just imposed on the employee a duty to keep confidential the restricted information he held regarding the company.

Key Takeaways – Confidentiality clauses are a must have

The decision of the High court is good news for employers, particularly given the facts at stake. Employers should therefore be encouraged to include a robust confidentiality clause in the employee’s contract in France and ensure the confidentiality obligations are reconfirmed at the time of termination. Even though there is an implied duty to keep information confidential during the employment contract, this duty falls when the employment contract expires, and the confidentiality clause which needs to be expressly agreed by the employee prior to the termination will be helpful to protect the employers interests when parting with the employee.

Currently only non-compete clauses are subject to a financial compensation in an employment contract. It will be interesting to see whether, like confidentiality clauses, non-solicitation clauses that apply post termination also continue to be exempt from any financial compensation.