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What are the obstacles to starting a business while being an employee? Part 2

The employee who does not respect his exclusivity clause violates his contractual obligation. As such, it may be sanctioned by dismissal for misconduct, which in certain cases can be qualified as serious misconduct, in which case the employee may not claim either the termination indemnity or the compensation for notice. Only paid leave not taken will be paid.

B- Obstacles after the termination of the employment relationship

Considered at the time of the conclusion of the employment contract, the non-competition clause, which also limits the exercise of professional activity, takes effect after the termination of the employment relationship. Such a clause is only valid if it meets the following conditions:

– be essential for the protection of the interests of the company;

– take into account the specificities of the employee’s job (possibility for the employee to find a job corresponding to his qualification);

– be limited in time (duration of its application) and in space (geographical area concerned);

– be accompanied by the employee by a financial contribution.

The non-competition clause which does not meet these conditions will be declared void by the court and therefore releases the employee from his obligation.

An employee who violates the non-competition clause loses his right to financial compensation.

In addition, the employment contract may include a penalty clause in the non-competition clause, which is a lump sum indemnity that the employee must pay to the employer.

Finally, the judge can order the employee to cease his activity.

What are the obstacles to starting a business while being an employee?

Being at the disposal of his employer, the employee may be prevented from setting up a business in certain cases. This restriction of the freedom to undertake, which is nevertheless a principle with constitutional value, can be put in place by the insertion in the employment contract of clauses which apply during the employment relationship (exclusivity clause) or after the termination of the employment contract (non-competition clause). It can also simply arise from the employment relationship (obligation of loyalty) without it being necessary to introduce any clause.

A- Obstacles during the employment relationship

When the employee signed his employment contract, the employer was able to provide for a so-called exclusivity clause that prohibits or limits the exercise by the employee of another professional activity. Such a clause can be particularly restrictive since it can concern any type of activity and not only those likely to compete with the employer.

However, it is possible to rule out the application of this exclusivity clause. Thus, the Labor Code allows an employee who creates a company to suspend the application of the exclusivity clause provided for in his contract for one year from:

 – or its entry in the trade and companies register;

– or his declaration of the start of professional activity.

This suspension may be extended if the employee takes leave or part-time work for setting up a business, which was mentioned previously, until the end of this leave or part-time.

In addition, the exclusivity clause, which restricts the freedom to work, is only valid if it is essential for the protection of the legitimate interests of the company, justified by the nature of the task to be accomplished and proportionate to the aim sought.

In other words, the employee can ask the Labor Council, the competent court to deal with disputes between employers and employees concerning the execution and termination of the employment contract, to rule out the application of an exclusivity clause if it does not meet the criteria indicated above.

The employee who does not respect his exclusivity clause violates his contractual obligation. As such, it may be sanctioned by dismissal for misconduct, which in certain cases can be qualified as serious misconduct, in which case the employee may not claim either the termination indemnity or the compensation for notice. Only paid leave not taken will be paid.