Background
Mme N was hired as a client manager on March 23, 2009, by VDI group (later Upergy). Her employment contract included a non-compete clause requiring her to refrain from working for competitors, with the employer obligated to pay financial compensation in exchange. The contract permitted the employer to waive this obligation by notifying the employee in writing within 15 days following termination of employment.
On March 9, 2020, Mme N resigned, with her notice period ending April 9, 2020. The employer did not notify her of any waiver within the 15-day deadline (which expired March 24, 2020). Instead, on April 22, 2020—13 days after her departure—the employer notified her that it was waiving the non-compete obligation. Mme N filed suit demanding payment of the contractual compensation, arguing the waiver was untimely.
Upergy appealed, relying on Ordinance No. 2020-306 of March 25, 2020, an emergency measure that extended various deadlines during the COVID-19 crisis. Article 5 of that ordinance provided that contractual deadlines for contract termination could be extended by two months if they expired during the emergency period (March 12 to June 23, 2020). Upergy argued this extension applied to the non-compete waiver deadline.
The Court’s Holding
The Court of Cassation rejected Upergy’s appeal. The court established that an employer wishing to waive a non-compete clause in the event of resignation must do so within the contractual deadline and no later than the employee’s effective departure date. Once the employee departs, the employee becomes bound by the non-compete obligation and is entitled to receive the contractual compensation.
The critical issue was whether Ordinance 2020-306 extended the 15-day waiver deadline. The court held that the ordinance’s deadline extension applied only to “résiliation” (termination or dissolution) of contracts. A contractual waiver right—the employer’s unilateral discretion to renounce the non-compete obligation—is not a contract “termination” within the meaning of Article 5. Rather, it is an independent, optional contractual right. Because the waiver right is not a termination, the deadline extension in the emergency ordinance did not apply to it.
The lower court (Cour d’Appel de Grenoble) had correctly concluded that the ordinance’s delay extension could not apply to a contractual renunciation right and that Upergy had waived the clause too late. Since the waiver was untimely, the non-compete clause remained enforceable, and Upergy was obligated to pay Mme N the financial compensation. The Court of Cassation upheld this reasoning.
Key Takeaways
- A contractual waiver right (renouncing a non-compete obligation) is legally distinct from contract termination and is not governed by statutory extensions of termination deadlines.
- Under French law, an employer must waive a non-compete clause by the contractual deadline or, at latest, on the employee’s actual departure date; failure to do so makes the obligation enforceable.
- COVID-19 emergency ordinances extending contractual deadlines do not extend optional waiver rights that are conditions precedent to avoiding performance obligations.
Why It Matters
This decision clarifies the distinction between mechanisms for dissolving contractual duties and optional rights to escape contractual performance. It prevents employers from using extraordinary legislative measures designed to accommodate unforeseen crises as a backdoor to retroactively excuse non-compliance with contract deadlines. The ruling has practical importance for employers managing non-compete agreements and demonstrates that courts will strictly construe emergency deadline extensions to their stated purpose (contract termination) rather than expanding them to cover related but distinct contractual rights.
The decision also reinforces the principle that once an employee’s departure takes effect, contractual protections (such as non-compete compensation) vest immediately unless the employer has timely exercised its contractual right to waive them. This protects employees from retroactive deprivation of negotiated benefits due to employer delay or reliance on extraordinary circumstances.