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  5. KEY RULINGS IN FRENCH LABOUR LAW: INTRA-GROUP TRANSFERS, NON-COMPETITION CLAUSES AND DUTY OF LOYALTY IN THE WORKPLACE

KEY RULINGS IN FRENCH LABOUR LAW: INTRA-GROUP TRANSFERS, NON-COMPETITION CLAUSES AND DUTY OF LOYALTY IN THE WORKPLACE

Published on : 30/07/2024 30 July Jul 07 2024
Newsletter / Recent Case Law

In case of an intra-group transfer, the transfer must be materialized by a single tripartite agreement signed on the same date by the two successive employers and the employee.
An employee who had suffered a vocational accident signed a termination agreement with his employer, providing that he would take up a position within another company in the group, on the same day, under the same or better conditions than at the time of the termination of his previous employment contract. The following day, the employee signed an indefinite-term contract with the other company’s group. Two years later, the employee was dismissed and decided to challenge the validity of the termination agreement he initially signed before being transferred. 
On May 7th, 2024, the French Supreme Court ruled that the first termination was null and void as the validity of the transfer agreement must comply with a certain formal requirement, i.e. the employee and his successive employers must all sign a single document organizing the continuation of the employment contract and not 2 distinct documents. 

When the employee breaches an unlawful non-competition clause, the employer may still request reimbursement of the financial compensation received by the employee.
In this case, the employment contract of the employee provided for a one-year non-competition clause covering the whole French territory. Following the employee's resignation, the employer claimed before the industrial tribunal that the employee breached his non-competition clause and asked for the reimbursement of the financial compensation he received accordingly. For his part, the employee claimed that the employer was not entitled to claim reimbursement, as the clause was invalid due to its excessively broad geographical scope.
On May 22nd, 2024, the French Supreme Court ruled that despite the unlawfulness of the non-competition clause, the employee's breach of the clause during the period in which it was effectively applied, allowed the employer to claim for the reimbursement of the financial compensation. The judges considered that the employee’s breach entitled the employer to a reimbursement of the financial compensation allocated to the employee even if the non-compete undertaking was illicit.
Conversely, if the employee had complied with the non-compete undertaking, the employer would not have been entitled to such reimbursement. An illicit non-compete clause that is respected by the employee makes the employer additionally liable to the payment of damages to the employee. 

A human resources director, who conceals his intimate relationship with a staff representative, is in breach of his duty of loyalty towards the company, thereby justifying his dismissal for serious misconduct.
An employee being in charge of a company’s human resources and chairing over the various staff representative bodies, had been in an intimate relationship for several years with another employee of the company, who held various trade union and staff representation mandates. When the employer discovered this relationship, he dismissed the human resources manager for serious misconduct (“faute grave”). The employee challenged the validity of his dismissal, claiming that this relationship was protected by the duty to respect his private life.
On May 29th, 2024, the French Supreme Court ruled that the employer's decision to dismiss the employee for serious misconduct was valid because the employee breached his duty of loyalty towards his employer by hiding an intimate relationship with a staff representative, this relationship being related to the employee's duties and of such a nature as to affect their proper performance.

 
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