OD FLASH | Non-competition clause: the form agreed by the parties is binding

Cour de cassation, chambre sociale, 3 juill. 2024, n°22-17.452

In a judgment delivered on 3 July 2024, the Court of Cassation ruled on the importance of complying with the formalities agreed by the parties regarding the waiver of a non-competition clause.

In this case, an employee had been hired in January 2015 under an employment contract that provided for a six-month probationary period and a non-competition clause, the terms of which provided that the employer could waive the clause: ‘subject to having notified its intention by registered letter with acknowledgement of receipt (LRAR) within a maximum period of 15 days following the notification of the termination of the employment contract’. On 24 July 2015, the employer terminated the employee’s probationary period and subsequently waived the application of the non-competition clause in emails dated 4 and 6 August 2015.

The employee appealed to the Labour Court and then to the Paris Court of Appeal, seeking to have this termination reclassified as a dismissal without real and serious cause and, in particular, to obtain payment of the periods of the non-competition clause that had elapsed since the said termination, as well as the related paid leave.

The lower courts ruled that the termination of the contract at the end of the probationary period should be considered as a dismissal without real and serious cause and that the claim for payment of the financial compensation for the employee’s non-competition clause should be granted, considering that the employer’s waiver of this clause by registered letter was ‘an essential formality’ that could not be replaced by an e-mail, since this formal requirement was laid down in the clause itself.

The employer therefore appealed to the French Supreme Court, arguing that the waiver of the non-competition clause was ‘clear and unequivocal’, that there were no ‘formal conditions [for] this waiver’ and that the employee had not suffered any prejudice as a result of the waiver by email.

The High Court was therefore asked to rule on the validity of the employer’s waiver of the application of such a clause by email when the clause provided for waiver by registered post. In its decision of 3 July 2024, the Court of Cassation followed the reasoning of the lower courts and dismissed the appeal, holding that where such a clause provides that the employer may waive it by registered letter within a maximum period of 15 days following the notification of the termination of the employment contract, and the employer waived it by e-mail, the waiver is not valid. For employers, this decision is a useful reminder of the possibility of unilaterally waiving the non-competition clause, provided that the employment contract or collective agreement so provides, and of the imperative of contractual formalism of the waiver of such a clause, which is binding on the parties (Cass. Soc., 22 Sept. 2010, 09-41.635; Cass. Soc., 21 Oct. 2020, 19-18.399). 2024 will therefore continue to be a year rich in reminders and jurisprudential contributions concerning the non-competition clause (cf. OD FLASH on the breach of such a clause and the loss of the financial consideration, Cass. Soc., 24 Jan. 2024 no. 22-20.926).