Restrictive covenants
Published on :
29/04/2024
29
April
Apr
04
2024
In France, a post-termination restrictive covenant must meet 5 conditions:
1. the company has a proprietary interest to protect that renders such type of clause indispensable
2. it must be limited in time
3. it must be limited in geographic scope
4. it must be limited to a specific activity
5. it must give rise to compensation (with many collective bargaining agreements imposing certain mandatory amounts)
2. it must be limited in time
3. it must be limited in geographic scope
4. it must be limited to a specific activity
5. it must give rise to compensation (with many collective bargaining agreements imposing certain mandatory amounts)
It is not possible for an employer to unilaterally waive the non-compete clause upon notification of dismissal except when this is allowed under the applicable collective bargaining agreement and was provided for in the employment contract.
In case of litigation, the validity of the covenant will depend on its scope and judges cannot “blue-pencil” the covenant (i.e. decide that the covenant will apply as they judge reasonable).
In a ruling dated January 24th, 2024, the French Supreme Court confirmed that if an ex-employee breaches his restrictive covenant and then starts respecting it again, the company is no longer required to pay any further compensation.
In case of violation, the former employer can claim damages for loss sustained or apply a penalty clause if this is included in the employment contract. However, judges can decide to reduce the amount of the penalty clause.
DO
- Check if the collective bargaining agreement which automatically applies to your company’s activity provides for any special terms with regards restrictive covenants
- Include a waiver option in case of termination and a reasonable penalty clause, if possible
- Keep track of ex-employees’ employment status to ensure they are not violating their restrictive covenant
DON'T
- Impose restrictive covenants in all employment contracts regardless of employees’ roles and responsibilities
- Forget to regularly check if restrictive covenants still provide for the proper scope when employees change jobs within the company
- Forget to check the terms of the restrictive covenant when an employee leaves the company
History
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Germany: Compensation Claims of Employees if Targets for Variable Remuneration are Set Too Late
Published on : 24/05/2024 24 May May 05 2024L&E GlobalThe post Germany: Compensation Claims of Employees if Targets for Variable Re...Source : leglobal.law
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Czech Republic: Flexible Amendment to the Labour Code
Published on : 24/05/2024 24 May May 05 2024L&E GlobalThe post Czech Republic: Flexible Amendment to the Labour Code appeared first...Source : leglobal.law
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China: Non-compete Agreement Cannot Impede the Autonomous Employment Rights of Employees without Confidentiality Obligations
Published on : 24/05/2024 24 May May 05 2024L&E GlobalThe post China: Non-compete Agreement Cannot Impede the Autonomous Employment...Source : leglobal.law
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China: Beijing High People’s Court and Beijing Labour and Personnel Dispute Arbitration Commission Issued Answers to Labour Dispute Cases (Part 1)
Published on : 24/05/2024 24 May May 05 2024L&E GlobalThe post China: Beijing High People’s Court and Beijing Labour and Personnel...Source : leglobal.law
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USA: California Supreme Court Issues Opinion on “Hours Worked”
Published on : 22/04/2024 22 April Apr 04 2024L&E GlobalThe post USA: California Supreme Court Issues Opinion on “Hours Worked” appea...Source : leglobal.law
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USA: Top Five Labor Law Developments for March 2024
Published on : 22/04/2024 22 April Apr 04 2024L&E GlobalThe post USA: Top Five Labor Law Developments for March 2024 appeared first o...Source : leglobal.law