Definition and Types of Restrictive Covenants
Post-termination restrictive covenants are fairly common in French employment contracts, especially for senior employees or those with access to confidential information, senior responsibilities or contact with the clientele. In principle, restrictive covenants must be justified by the nature of the duties to be performed and proportionate to the aim that is pursued.
The following restrictive covenants are recognised and may be enforceable under the law:
- Non-compete clauses;
- Non-solicitation of customers;
- Non-solicitation of employees.
Enforcement of Restrictive Covenants – Process and Remedies
Under French law, restrictive covenants can be enforced in different ways depending on the situation:
- if the employee breaches the restrictive covenant, the former employer can issue a claim before the Labour Court in order to obtain an injunction to stop the employee from carrying out the activity. The former employer may also claim damages for the loss sustained. Instead of claiming damages, the employer may request the application of a penalty clause, if one is contained in the employment contract.
- if the employer breaches the restrictive covenant or if the clause is void, the employee may claim damages, if he has observed the provisions of the clause.
- if an employer knowingly hires an employee subject to a non-compete clause, the former employer has grounds for claiming damages against it.
Use and Limitations of Garden Leave
The notion of “garden leave” as such does not exist under French law. Upon termination of employment, the employer may release the employee from working during all or part of the notice period and pay him an indemnity in lieu of notice, or alternatively require the employee to work until the end of the notice period. If the employee expressly requests to be released from his obligation to work during the notice period, and if the employer agrees to it, then the employer is not required to pay the employee and the employment contract may be terminated upon the employee effectively leaving the company. The French Supreme Court ruled that the employee, who is not subject to a non-compete clause and who is on garden leave, may work with a competing company during his notice period.