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The financial counterpart of the non-compete clause
Financial compensation for non-competition clause: The non-competition clause is a very common clause in employment contracts. The non-competition clause, which forms part of this agreement, prohibits employees from engaging in a competing professional activity after leaving the company, which could harm the interests of their employer.
In a judgment of the Cour de cassation of 16 May 2012 (n°11-10760 PFB), the social chamber considers that the judge cannot declare such a clause null and void and, at the same time, order the employer to pay a financial contribution.
In the present case, an employee, having complied with his non-compete obligation, was claiming from his former employer additional financial compensation, taking into account his variable remuneration.
The Court of Appeal first considered this clause to be null and void in light of a paltry consideration, and then ordered the employer to pay the "good" amount revalued as damages.
However, such a clause being declared null and void by the judges, the financial compensation is no longer justified, regardless of the amount. Only damages could be paid to the employee based on the damage suffered.
In the presence of a collective agreement, the amount of the consideration would not have had to be revalued because it is set by the latter (Cass. soc. 5 May 2010, no. 09-40710 D).
Law Firm DAMY, lawyer at the Nice Bar: non-competition clause