As in the UK, if an employee is dismissed for gross misconduct in France, the position in relation to the notice period is clear: the employee is not entitled to notice or a payment in lieu and leaves the company immediately. The position can be more complicated however where the employee is dismissed for a reason other than gross misconduct, particularly in the case of more senior employees. The employee is entitled to notice, but it is relatively rare for the employer to want the employee to continue to come to work during the notice period. The employer must therefore choose whether to pay in lieu, or to ask the employee to remain at home during the notice period. Traditionally, the latter option has been seen as a means of effectively extending the period of protection for the employer from competition by the employee.

The French Supreme Court has however recently confirmed that where an employee is not required to work out his notice period at the initiative of the employer and is asked simply to remain at home, the employee is no longer bound by an obligation of loyalty to his employer. Despite technically remaining an employee during such "garden leave" (and retaining an entitlement to salary payments and all benefits), the employee can therefore in practice start working immediately for a new employer or indeed, start his own business (even where this is in competition with his former employer).

The only restriction in practice on the employee will be the employer's ability to enforce restrictive covenants. The French Courts consider that, notwithstanding the fact that the contract of employment has not yet terminated, the "post-termination" restrictive covenants will operate during the garden leave period to prohibit the employee from competing with his employer. However, this is only the case if the covenants are considered enforceable. In particular, French law requires that the employer pays to the employee a sum of compensation during the restricted period. In this way, the employer could find itself paying full remuneration plus compensation to the restricted employee during his garden leave.

Although UK law on restraint of trade is different in this respect, it is important to ensure that key employees have carefully drafted restrictive covenant provisions to protect the employer both post-termination and in the event that the employer does not wish the employee to attend the office during his or her notice period. (Cass soc. 28 March 2007 n° 05-45.423).