XIVth Meeting of European Labour Court Judges 4 September 2006 Cour de cassation Paris ____________________________________________________________

_______________ FRANCE

Non-competition clauses in labour contracts
National reporter: M. Michel Blatman Conseiller à de la Cour de cassation, Paris

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What clauses, if any, are in your country’s constitution relating to covenants not tocompete in labour contracts? Are there clauses relating to the freedom of occupation; protection of property (if so, does this include intellectual property and trade secrets); freedom of contract, etc. If there are such clauses, how are they applied relating to covenants not to compete? Which, if any, of the EU Directives relating to this subject are applied in your country? R. The Constitutionof the French republic does not contain any clause relating to covenants not to compete. But the French Déclaration des droits de l’Homme et du Citoyen (Declaration of rights of Man and of Citizen) of 1789 provides in its Article 4 that liberty consists in being free to do anything that does not harm other people, and its Article 17 that property is a sacred and inviolable right. A decree of 2and 17 March 1791 also provided that any person would be free to do such business, or to practise such occupation, craft or job she saw fit to her. The Constitutional Council (Conseil Constitutionnel) held in 1982 (16 January) that the principle of freedom of commerce and industry is of constitutional value. In a more recent decision (Decision n° 2000-439 DC of 16 January 2001) the same Councilstated that the law maker is allowed to bring to the freedom of undertaking limitations related to constitutional requirements or justified by the genereal interest, provided that there should not result disproportioned restraints regarding the aimed objective. The Council also recognized the freedom of contract as a principle of constitutional value: First, indirectly (Decision n° 98-401 DC of 10June 1998): « Considérant, enfin, que le législateur ne saurait porter à l’économie des conventions et contrats légalement conclus une atteinte d’une gravité telle qu’elle méconnaisse manifestement la liberté découlant de l’article 4 de la Déclaration des droits de l’homme et du citoyen de 1789 ». The criterion was that a severe damage to the economy of the contract would realize a violation ofthe general liberty set by the Declaration of 1789. Then directly in 2003 (Decision n° 2002-465 DC of 13 January 2003) ruling, about the “liberté contractuelle” (freedom to contract), that the legislator should not breach contracts legally concluded, if he did not justify of a sufficient general interest.

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Non-competition clauses in labour contracts – France

The Article L. 120-2 of theCode du travail (Labour code) does not govern especially covenants not to compete but lays down the general principle according to which no one shall be allowed to impose on the rights of persons and individual or collective freedoms restrictions that would not be justified by the nature of the task to carry out, nor proportionate to the goal pursued. The Commercial Chamber of the Cour decassation ruled in 2000 (24 October 2000, n° 98-19774) that pursuant to the principle of freedom of commerce and industry, the door-to-door selling to someone else’s customers is free as long as it not accompanied by unfair deeds. The Social Chamber of the Cour de cassation considers that freedom of contract authorizes employers and employees to include a covenant not to compete in the individualcontract of employment . Without such a clause, the employee, only held by a duty to maintain fidelity towards his employer during the performance of the contract of employment, gets its independence back after the termination of the latter. He is then allowed to go into competition with his former employer, provided that this occurs with fair means (no unfair competition, violation of trade secrets,…