Two recent cases from the French Cour de Cassation highlight some interesting issues for French employers entering into or seeking to enforce post-termination restrictive covenants.
In France, if an employer wants to restrict the ability of an employee to compete post- employment, several requirements have to be fulfilled, including a payment to the employee of his salary for the duration of the restriction.
If an employer is a few days late in making such a payment, does this render the clause unenforceable? No, said the Cour de Cassation, a slight delay in payment does not necessarily invalidate the clause. In this particular case, the employee had argued that since his employer had not made the payment immediately after termination of his employment, the clause had not been complied with so the restriction was invalid and unenforceable.
The employee also argued that since the non-competition clause said that he could not work as a “Commercial Director” in a competing business, it did not apply where he was going to work in his new role as a “General Manager”. The Court disagreed and said that as the activities performed were identical, it did not matter that his role in the competing business had a different title.
This case is helpful for employers, as the Court was prepared in this instance to give a generous interpretation to the construction and application of the post-termination restriction. Having said that, in practice employers should always consider carefully how a post-termination clause should be drafted and they should always seek to comply with the terms of the clause (including any payment terms) so as to avoid any arguments that the clause is invalid. Precision as to the activities covered rather than a generic description of the job title may also be helpful.
In a less helpful decision for employers, the Cour de Cassation ruled in a different case that where the employer had paid the non-competition payment during the employment relationship, as opposed to when the employment terminated, it was not entitled to recover any of the sum paid when it agreed to release the employee from the non-competition covenant on his exit. The Court took the view that the payments amounted to salary and the employee was not therefore obliged to reimburse the employer on termination.