Lexique RH

Non-Compete Clause: Definition and Best Practices

What is a non-compete clause? Legal definition, validity conditions, recruitment use and practical advice for SMEs.

Non-Compete Clause: Definition and Best Practices

Sommaire

1–2 years
Typical maximum duration
~30% salary
Minimum financial consideration
4 cumulative
Validity conditions
Yes
Void if not complied

Definition

A non-compete clause is a contractual provision that prevents an employee, after leaving the organisation, from engaging in competing activity during a defined period and geographic area. It must include mandatory financial consideration to be valid and protects the employer's legitimate interests (know-how, customer base, trade secrets).

Four Conditions for Legal Validity

  1. 1

    Protection of Legitimate Business Interest

    The clause must protect a genuine strategic element: unique know-how, customer base, trade secrets. Cannot be imposed on all employees.

  2. 2

    Time Limitation

    Generally 6 months to 2 years maximum. Beyond 2 years, the clause risks being struck down as disproportionate.

  3. 3

    Geographic Limitation

    The prohibited area must match actual business territory. A regional SME cannot impose national restrictions.

  4. 4

    Mandatory Financial Consideration

    Without consideration, the clause is void. Courts typically require at least 30% of base salary for the clause duration.

Non-Compete vs Confidentiality: Key Differences

Comparing Two Clauses

CritèreNon-Compete ClauseConfidentiality Clause
PurposeProhibits working for competitorProhibits disclosing sensitive info
DurationLimited (6 months–2 years max)Potentially unlimited
ConsiderationMandatory (min. 30% salary)Not mandatory
ApplicationAfter departure onlyDuring and after employment
Employer costHigh (payroll charges)Minimal or zero

Actions When Candidate is Subject to Clause

  • Explicitly ask if candidate is bound

    During interview or before offer

  • Obtain a copy to verify terms

    Duration, geography, activities covered

  • Consult legal counsel if uncertain

    Avoids liability for breach of others' covenants

  • Negotiate start date after clause expires

    If valid and cannot be waived

  • Encourage candidate to seek waiver

    Former employer can waive in writing

0/5 effectué(s)0%

Legal Risk for Recruiting Employer

Hiring a candidate who breaches their non-compete exposes your organisation to litigation. The previous employer can obtain damages against you for complicity.
Can a non-compete be imposed on interns or trainees?
Legally yes, but rarely justified. Interns typically don't access sufficiently sensitive information. If used, it must meet all four validity conditions, including mandatory financial consideration.
What happens upon redundancy?
The clause applies regardless of termination reason (resignation, redundancy, settlement), unless the employer waives it. Upon redundancy for gross misconduct, some employers attempt non-payment: this is illegal, consideration remains due in all cases.
Is financial consideration taxable?
Yes, it's treated as wages and subject to income tax and social contributions. The employee declares it; the employer pays employer contributions. This is a real cost to anticipate when drafting the contract.
How can a non-compete be waived?
The employer can waive before or at departure. The waiver must be documented in writing to be valid. It releases the employer from paying consideration but must be formally notified within contract-specified timeframes.

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Aurelia helps centralise employment documents, asks candidates the right questions and manages non-compete constraints.

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