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Employees in France Must Be Compensated During Post-termination Non-compete Period

Multinational companies with employees in France should be aware that terminated employees subject to a non-compete restriction must be compensated during the non-compete period after termination of employment.  Given this legal requirement, non-compete and severance agreements for employees in France must provide for financial compensation after employment termination during any non-compete period.  If compensation is not provided during the non-compete period, the non-compete agreement is null and void, and the terminated employee is free to work for competitors.  In the event an employer becomes aware that a former employee is breaching his or her non-compete agreement, the employer should still pay the financial consideration until it has strong written evidence of the breach.  If the employee stops receiving financial consideration, the former employee could argue that the employer is breaching the severance or non-compete agreement and that the non-compete provision thus is no longer binding.  Alternatively, non-compete agreements in France should provide that the employer can waive the non-compete restriction within a certain number of days following the employee's termination of employment.  This type of provision allows an employer to voluntarily choose to waive non-compete restrictions and avoid paying the former employee further financial consideration following employment termination.

In light of these requirements, multinational companies should make sure local management in France establish non-compete and severance agreements with French employees that allow a waiver of non-compete provisions within the prescribed time periods or that provide adequate financial consideration for any non-compete agreement provisions they want to enforce.

© 2020 McDermott Will & EmeryNational Law Review, Volume II, Number 111


About this Author

Jilali Maazouz International Labor & Employment Attorney Paris McDermott Will Emery Law Firm

Jilali Maazouz is a partner in the law firm of McDermott Will & Emery and is based in the Firm’s Paris office.  He focuses his practice on labor and employment, commercial litigation and international trade. 

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Todd A. Solomon apension 401k attroney  McDermott Will & Emery LLP, Chcago

Todd A. Solomon is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  Todd focuses his practice primarily on designing, amending, and administering pension plans, profit sharing plans, 401(k) plans, employee stock ownership plans, 403(b) plans, and nonqualified deferred compensation arrangements.  He also counsels privately and publicly held corporations and tax-exempt entities regarding fiduciary issues under ERISA, employee benefits issues involved in corporate transactions, executive compensation matters, and the implementation of benefit programs for domestic partners of employees. 

Todd has significant ERISA Title I experience and has counseled plan fiduciaries with respect to investment policies, private equity, hedge funds, and other alternative investments, prohibited transaction issues, investment management agreements and payment of expenses from plan assets.

He advises multinational clients on global employee benefits matters and compliance issues. Todd is a council member of the International Bar Association Global Employment Institute (GEI) and serves as editor of the GEI’s Annual Global Report on global legal issues impacting human resources.

Todd represents clients before the Internal Revenue Service on issues such as Employee Plans Compliance Resolution System (EPCRS) filings, Audit Closing Agreement Program (CAP) negotiations, benefit plan audits and applications for determination letters. He negotiates with the Department of Labor in connection with benefit plan audits and Voluntary Fiduciary Correction Program filings, and the Pension Benefit Guaranty Corporation in connection with 4062(e) events and plan terminations.

Todd chairs the Firm's Pro Bono and Community Service Committee. He received the 2008 McDermott Will & Emery award for Outstanding Achievement and Commitment to Pro Bono and Service to the Community. Additionally, he is a member of the McDermott's Diversity and Inclusion Committee and has been involved with evaluating the Firm's domestic partner benefits policies and working with businesses in Chicago in jointly advocating for lesbian, gay, bisexual and transgender (LGBT) rights in the workplace.