Exclusivity, non-competition and non-abuse clauses

In principle, employees enjoy a freedom of work that employers cannot interfere with. In practice, however, some employment contracts contain clauses that restrict this freedom to work. To be valid, these clauses must be proportionate to the aim to be achieved, and justified by the need to protect the company’s interests. For example, an employment contract may include an exclusivity clause that applies throughout the employment relationship, as well as a non-competition clause that may apply at the end of the employment contract.

In addition to these two clauses, the employer can also limit the employee’s freedom to work by signing a non-rejection clause with a competing company.

This is the clause under which the employee undertakes to work solely for his employer and, ultimately, to refrain from any form of professional activity outside the company. Of course, this clause can be tempered by mutual agreement between the employees and the employer. There is no regulated financial compensation for this employee. Failure to do so may result in disciplinary dismissal.

For a long time, the legitimacy of such a clause in the context of a part-time contract was questioned. Initially outlawed, case law has softened its stance, ruling that such a clause would be valid in the context of a part-time contract, provided it meets three conditions designed to protect the company’s interests. That any prohibitions remain proportional to the level of protection sought by the employer.

Its inclusion in the contract must be justified by the nature of the position held by the employee. In fact, these clauses apply to all types of contract.

These clauses are also designed to restrict the employee’s freedom to work for another company, unlike those mentioned above, i.e. the exclusivity clause only applies at the end of the employee’s employment contract and only concerns companies that represent a direct competitive threat. Once again, this clause is only applicable if it protects the company’s interests.

To be valid, it must meet certain conditions, i.e. be limited in time and space. A specific activity and, of course, a quid pro quo for the employee. In practice, therefore, it applies either on the effective date of termination of the contract, at the end of the notice period if there is one, or on the date on which the employee leaves the company.

Exemption from notice period. Moreover, the indemnity is due as soon as the clause is applicable, even in the event of dismissal for gross misconduct or resignation. Obviously, this clause loses its effect if either party fails to comply with it. Thus, if the employer fails to pay the employee the financial compensation, the latter would not be bound by these non-competition clauses.

Note that in the event of a dispute, judges may order the employer to pay damages to the employee for the harm suffered. In addition to the compensatory indemnity that remains due to the employee for the period during which he has respected this non-competition clause. Similarly, if the employee does not respect this clause, the compensatory indemnity is de facto cancelled, and the judge may this time order the employee to pay damages for the prejudice suffered by the company.

In this case, unlike the first two, employment law does not apply, as the clause is generally part of a commercial contract. Indeed, when two companies maintain a commercial relationship, they may fear that their high-performance staff will be recruited by the co-contracting company to prevent this poaching. The contract between these two companies may include a non-solicitation clause, known as a “no-choice” clause.

This clause may be unilateral. This will often be the case for contracts with service providers who send employees on assignment to client companies. These companies will then undertake not to poach the employee concerned for a specified period. This clause may also be reciprocal. This is the case for two customer-supplier companies, who agree not to poach or even hire after the employment contract has been terminated.

Employees to the employees concerned. Failure to comply with the non-rejection clause entails a penalty for the contracting company in the form of a penalty clause in the commercial contract. So, unlike the non-competition clause discussed above, in the case of the non-rejection clause, the employee is not party to the contract. He is therefore not obliged to do so.

On the other hand, he can claim damages should the latter be prejudicial to him.