In France, as in a number of other European countries, a non-competition clause will only be valid if the employee receives a payment from the employer for abiding by it. The amount of the payment is determined in each national collective bargaining agreement and may vary from 30% to 100% of an employee’s average gross monthly salary, payable for the duration of the restriction. If the agreement is silent on this issue, the Courts have determined that the payment has to be set out in the contract of employment itself and cannot be less than 33% of the employee’s average gross monthly salary.
The French Supreme Court (the highest Court in the French legal system) has recently held that a non-competition clause was unenforceable for want of payment to the employee for entering into it. No surprises there. Of much greater concern is that it went on to say that the employee was also entitled to damages to compensate him for the fact the covenant had effectively stopped him from applying for (or accepting) jobs with any competitor companies during the term of his employment. In other words the employee did not have to wait until the termination of his employment to challenge the validity of the non-competition clause or to make a claim for damages for the “detriment” suffered as a result of entering into the clause.
The Court paid no heed to arguments that if the clause was invalid the employee could ignore it with impunity anyway, or that if he thought it was valid when agreeing to it, he had not suffered any detriment by respecting it in the meantime.
In light of this seemingly quite surreal decision employers in France should review their contracts to ensure that any non-competition clauses (and by extension, non-solicitation provisions) are lawful.