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The financial counterpart of the non-competition clause:
The non-competition clause is a very common clause in employment contracts. Integrated into this, the non-competition clause prohibits the employee after leaving the company, the exercise of a competing professional activity, likely to harm the interests of his employer.
In a judgment of the Court of Cassation of May 16, 2012 (n°11-10760 PFB), the social chamber considers that the judge cannot declare the nullity of such a clause and, at the same time, condemn the employer to pay financial compensation.
In this case, an employee, having complied with his non-competition obligation, demanded from his former employer additional financial compensation taking into account his variable compensation.
The Court of Appeal first considered this clause to be null in view of a derisory consideration, then condemned the employer to pay the “good” reassessed amount in the form of damages.
However, such a clause being declared void by the judges, the financial compensation is no longer justified, whatever 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 compensation would not have had to be reassessed because it is fixed by the latter (Cass. soc. May 5, 2010, no. 09-40710 D).
It is appropriate to add that the Court of Cassation (1), in a judgment dated April 9, 2015, affirms the impossibility for the employer to vary, and in this case reduce, the amount of the non-competition depending on the reason for termination of the employment contract.
1) Court of Cassation, Civil, Social Chamber, April 9, 2015, 13-25.847:: https://www.legifrance.gouv.fr/juri/id/JURITEXT000030470498/
Law firm Maître DAMY, lawyer at the bar of Nice: non-competition clause
