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The employee must keep his covenant not to compete, even if close of business

The subsequent termination of the business activity has not the effect of releasing the employee of his non-compete clause. (Cass. soc. 21-1-2015 No. 13-26374)

Under the employment contract or collective agreement, the non-competition aims to avoid, at the end of the contractual relationship that the employee would compete with his employer. It is necessarily accompanied by a financial compensation for the employee whose purpose is to be compensated for the temporary restriction of the freedom to work.

This raises the question when the company ceases completely its activity, it might seem paradoxical to force an employee not to compete with a company that no longer exists.

The Supreme Court pointed out, in a judgment of 21 January 2015, the subsequent cessation of business activity (dissolution decided by the employer or suffered liquidation) cannot affect the performance of the obligation “not to compete”. (Cass. Soc. 5-4 -2005 No. 02-45540: RJS 6/05 631; Cass soc 9-7-2008 No. 07-41970 10/08 RJS No. 994)

It follows from this solution that, if he aspires to perceive its entire monetary compensation, the employee is required to comply with the non-competition for the duration of its application. Otherwise, the amount of the compensation will be prorated to the effective enforcement of the obligation period.

2017-09-18T13:12:15+00:00 22/03/2015|Latest news|