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Details about the reactivation of a non-compete within the frame of intra-group mobility

In this case, a commercial director claimed against his previous employer for the payment of the indemnity due in consideration of the non-compete obligation he had, which had not been waived upon the signing of the tripartite agreement (between his two successive employers and him) organizing the transfer of his employment contract to another company of the same group.

The issue at stake had in principle already been settled by case law initiated since 1997 (French supreme Court, 3 June 1997 n°94-44.848) under which, in case of intra-group mobility, if the first employer does not waive the non-compete obligation in due course, it is ineffective until the termination of the employment contract with the second employer.

The French Supreme Court now considers that this solution is only enforceable provided the contractual period of application of the non-compete obligation still runs when the second employment contract terminates. In other words, an employee’s intra-group mobility does not have the effect of postponing or extending the duration of application of the non-compete obligation.

While this decision greatly reduces the risk of reactivation of a non-compete obligation for several months and even years after the termination of the initial contract, it is still recommended to ensure that the non-compete obligation follows the employee. This means that the tripartite agreement must provide (i) the release of the non-compete attached to the first employment contract and (ii) the introduction of a new non-compete obligation in the second employment contract with the new employer even if the terms of the non-compete are the same.

French Supreme Court, 12 sept. 2018 n° 17-10853