In France, as in many other mainland European countries, if an employer wants to restrict the ability of an employee to compete post-employment, several requirements have to be fulfilled, most notably a payment to the employee of 30% - 100% of his salary for the duration of the restriction.
If it wishes to waive the non-competition clause (e.g. because it no longer perceives the employee to be a threat to the business) and relieve itself from having to pay that sum, it must scrupulously respect the method of removal set out in the contract of employment or the relevant collective bargaining agreement. This will usually involve its sending the employee a separate letter waiving the restriction. If it does not comply with these requirements, it will still be obliged to pay the employee for the duration of the restriction even if it does not in fact hold him to it.
In a judgment in April 2013, the French Supreme Court demonstrated a degree of flexibility by ruling that an employer was entitled to include notice of the waiver of the non-competition clause in the dismissal letter itself, even though the terms of the relevant collective bargaining agreement stated that the employer could lift the restriction by sending a letter by registered post to the employee, i.e. implicitly suggesting that a separate letter should be sent.
The Supreme Court ruled that: “the employer’s inclusion of the notification announcing the waiver of the competition clause within the dismissal letter meant that the employee knew immediately the extent of his liberty to work, and thereby fulfilled the purpose of the clause authorising the employer to relieve the employee of his obligations”. The employer’s statement in the dismissal letter waiving the ban on employment with competing companies was therefore approved.
This decision is helpful for those employers where the employment contract or the relevant collective bargaining agreement is silent or unclear on the procedure to be followed for waiving a non-competition clause. If the relevant documentation expressly requires an employer to send a separate letter by registered post, employers must comply with this requirement if they wish to validly waive a non-competition clause. In the face of such an explicit requirement, the employer cannot rely on the “practical efficacy” arguments used in this case – that was only valid here because the terms for a withdrawal of the restriction were unclear as to what was actually required.
This ruling comes after another notable Supreme Court ruling in March confirming that if an employee is relieved from working during the notice period (whether in cases of dismissal or resignation) then he should be made aware of the lifting of the non-competition obligation on the last effective work day at the latest. Lifting a non-competition obligation during garden leave is therefore no longer possible.