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Non-competition Clause in Morocco
The emergence of new technologies, e-commerce, economic competition, the struggle for customer acquisition and retention, employees' intimate knowledge of the company's organization, their close relationships with clients... justify employers' mistrust towards their employees during the contract period.
Their fear is that upon leaving, employees might exploit this knowledge for their personal gain when they set up their own businesses or work for other competing companies.
Despite insufficient legal protection, companies are, indeed, safeguarded partly by criminal law, which criminalizes the disclosure of trade secrets (Art. 447 of the Penal Code), and partly by general rules on unfair competition.
However, these provisions are too inadequate to protect the interests of the company, some of which are closely linked to the employee's right to work for a new company, even a competitor, and in an activity for which they have been trained.
In other words, it would be unreasonable to prohibit a departing employee from continuing to "earn a living" elsewhere.
In Morocco, as in France, the non-competition clause is not provided for by labor legislation. The applicable rules have been developed by practice in the absence of specific texts. In fact, practice has seen the emergence of the non-competition clause inserted in the employment contract, in the collective agreement, or in the collective bargaining agreement, required by employers who want to protect themselves against the potential competitive actions of their former employees, considering that the law does not protect them in this regard.
It should be noted that even in the absence of a non-competition clause, the former employee's liability may be incurred in certain cases.
Employer Protection During the Contract Period:
Under general principles of law, the employee owes the employer a non-competition obligation, which prohibits them from engaging in any competing activity for their own account or for the account of another company while they are in the service of the employing company. Although not requiring an express provision in the employment contract, a breach of this obligation constitutes not only valid grounds for dismissal but also serious misconduct justifying the immediate dismissal of the employee without notice or compensation.
The non-competition obligation during the contract period can be subject to a clause mentioned in the employment contract, whereby the employee refrains from any activity, outside of their work, directly or indirectly, competitive or non-competitive with their employment activity, and the breach of this clause constitutes a reason for dismissal.
The purpose of including the non-competition clause is to prohibit the employee, after the termination or cessation of the employment contract, from engaging in the same activity either for their own account or for the account of another employer, for a limited time and space, provided that the exercise of the activity is deemed prejudicial to the former employer. Indeed, in certain activities, employers may fear the competitive actions of their former employees, and in the absence of such a clause, the employee may, at the end of their contract, engage in a competing activity to that of their employer.
Implementation of the Non-competition Clause:
It applies to the employee leaving the company regardless of the reason for the termination of the employment contract. It starts from the date of effective cessation of duties. In case of exemption from notice, it applies from the departure of the employee from the company.
Unless otherwise provided by agreement, the non-competition clause applies regardless of the circumstances of the termination, including in the event of: - Termination of a fixed-term contract; - Retirement; - Resignation; - Dismissal for personal reasons or for economic reasons. The fact that the dismissal is abusive or without real cause does not exempt the employee from complying with their non-competition obligation.
The clause may apply in case of termination during the probationary period if this was the intention of the parties. It must apply to the employer's activity as it is carried out at the time of the termination of the contract without excluding a domain in which the company has become interested after the signing of the employment contract.
In the event of the closure of the company with the disappearance of the activity at the time of termination, the non-competition prohibition, having no purpose, ceases to exist.
Validity Conditions:
The rules established by practice and accepted by the courts consider that for the non-competition clause to be valid, it must: 1- Be limited in time: the duration of the period during which the employee cannot engage in any competing activity must be specified. This duration, not fixed by law, must be reasonable. It should be noted that in France, it cannot exceed two years for the activity of sales representatives (VRP). 2- Be limited in space: the territorial area where any competing activity is prohibited must be specified. Thus, a clause prohibiting the employee from any similar activity throughout Morocco is considered null and void. 3- Be limited as to the prohibited activity: the non-competition clause must not undermine the principle of freedom of work, i.e., it must allow the employee the possibility of normally exercising their professional activity.
Legitimate Interests:
Furthermore, for the clause to be valid, it must be indispensable for the protection of the employer's legitimate interests regarding the nature of the activity. Thus, a company cannot rely on the non-competition clause provided for in the employment contract of a secretary who is only entrusted with purely executive tasks. The non-competition clause cannot prevent the employee from setting up their own business after the termination of their contract when the professional activity concerned is entirely new, or so specialized that finding a new job elsewhere is practically impossible.
Monetary Consideration:
The collective agreement, the regulations, or the employment contract regulate this type of clause. They limit its duration, confine it to a specific area, require monetary consideration for the employee, and provide for notification deadlines for exemption from the execution of the clause. The non-competition clause is valid even if no monetary consideration is stipulated, and the absence of a compensatory indemnity in the contract does not release the employee from their non-competition obligations. Conversely, if the contract, regulations, or collective agreement provide for one, the employer must apply it. As long as it is accompanied by monetary consideration, a non-competition clause is stipulated in the interest of both the employee and the employer. The latter cannot unilaterally waive it if the employment contract does not expressly give them the possibility to do so, which must be explicit and unambiguous. The waiver cannot result from the mention on the work certificate: "Free of any commitment".
Waiver of Execution of the Clause:
The exemption from the execution of the clause must be stipulated in the collective agreement, regulations, or individual contract, as well as a short period, after the notification of termination, during which the exemption is notified to the employee. If an employer wishes to exempt an employee from their non-competition obligation, they must do so within the time limit, failing which they risk having to pay the employee the entire compensatory non-competition indemnity.
Non-compliance with the Clause:
The employee who, in violation of the non-competition clause, joins the service of a competing company can be pursued by their former employer for damages resulting from non-compliance with the clause, for cessation of unfair competition, and for payment of the monetary consideration.
On the other hand, when the employer does not pay the compensatory indemnity due to the employee within the specified period, the employee may either bring the employer to the labor court to enforce payment or join a competing company.
Responsibility of the New Employer:
When an employee, who has improperly terminated an employment contract, renews their services, the new employer is jointly liable for the damage caused to the previous employer in the following three cases:
1- When it is demonstrated that they were involved in soliciting the employee;
2- When they hired a worker whom they knew was already bound by an employment contract;
3- When they continued to employ a worker knowing that they were still bound to another employer by an employment contract.
Absence of Non-competition Clause:
In the absence of a non-competition clause, the freedom granted to the employee upon the expiration of their employment contract does not allow them, however, to engage in a similar activity to that of their former employer under unfair conditions.
Unfair competition presupposes misconduct by the employee but not necessarily fraud or deceitful maneuvers.
Acts resulting in the disorganization of the former employer's company, commercial disturbance caused to it, or confusion created in the minds of the clientele are deemed wrongful by jurisprudence.
The former employer, who is a victim of such acts, may bring an action for unfair competition against their former employee and the new employer when the latter has been rehired.
The prejudice, the proof of which must be provided by the former employer, is sovereignly assessed by the trial judges.
Payment of the Consideration:
The existence of monetary compensation for the employee is a condition for the validity of the non-competition clause only if imposed by the collective agreement, regulations, or individual contract.
When the convention simply provides for the need for such compensation, its application is automatic: the indemnity will be due even if the contract contains no provision to this effect.
The employer's failure to pay the indemnity releases the employee from the non-competition prohibition.
Judicial Discretion:
When the judges find that the conditions of the clause are so restrictive that they exceed the legitimate protection of the company's interests, they may reduce the amount of the indemnity, the duration of the prohibition, or its geographical limit.
The non-competition clause in an employment contract must be justified by the legitimate protection of the company's interests, and the judges may declare it null and void if it is established that it was imposed by the employer solely to harm the employee or to prevent them from leaving their job.
Courts and the Clause:
In 1997, a pharmaceutical laboratory in Casablanca, to recruit qualified personnel, had no better idea than to poach the employees it needed from a competitor, offering them a slight increase in salary.
After a 3-year trial, the employees, who had underestimated the non-competition clause to which they were bound with the first employer who provided their training, were, in the first instance as in the appeal, sentenced to pay substantial sums representing several years of work.
Unable to pay these sums, the employees are now under the threat of coercive measures. The "poacher", on the other hand, is unlikely to pull off the same stunt twice.
Omar Touzani
Lawyer court
Their fear is that upon leaving, employees might exploit this knowledge for their personal gain when they set up their own businesses or work for other competing companies.
Despite insufficient legal protection, companies are, indeed, safeguarded partly by criminal law, which criminalizes the disclosure of trade secrets (Art. 447 of the Penal Code), and partly by general rules on unfair competition.
However, these provisions are too inadequate to protect the interests of the company, some of which are closely linked to the employee's right to work for a new company, even a competitor, and in an activity for which they have been trained.
In other words, it would be unreasonable to prohibit a departing employee from continuing to "earn a living" elsewhere.
In Morocco, as in France, the non-competition clause is not provided for by labor legislation. The applicable rules have been developed by practice in the absence of specific texts. In fact, practice has seen the emergence of the non-competition clause inserted in the employment contract, in the collective agreement, or in the collective bargaining agreement, required by employers who want to protect themselves against the potential competitive actions of their former employees, considering that the law does not protect them in this regard.
It should be noted that even in the absence of a non-competition clause, the former employee's liability may be incurred in certain cases.
Employer Protection During the Contract Period:
Under general principles of law, the employee owes the employer a non-competition obligation, which prohibits them from engaging in any competing activity for their own account or for the account of another company while they are in the service of the employing company. Although not requiring an express provision in the employment contract, a breach of this obligation constitutes not only valid grounds for dismissal but also serious misconduct justifying the immediate dismissal of the employee without notice or compensation.
The non-competition obligation during the contract period can be subject to a clause mentioned in the employment contract, whereby the employee refrains from any activity, outside of their work, directly or indirectly, competitive or non-competitive with their employment activity, and the breach of this clause constitutes a reason for dismissal.
The purpose of including the non-competition clause is to prohibit the employee, after the termination or cessation of the employment contract, from engaging in the same activity either for their own account or for the account of another employer, for a limited time and space, provided that the exercise of the activity is deemed prejudicial to the former employer. Indeed, in certain activities, employers may fear the competitive actions of their former employees, and in the absence of such a clause, the employee may, at the end of their contract, engage in a competing activity to that of their employer.
Implementation of the Non-competition Clause:
It applies to the employee leaving the company regardless of the reason for the termination of the employment contract. It starts from the date of effective cessation of duties. In case of exemption from notice, it applies from the departure of the employee from the company.
Unless otherwise provided by agreement, the non-competition clause applies regardless of the circumstances of the termination, including in the event of: - Termination of a fixed-term contract; - Retirement; - Resignation; - Dismissal for personal reasons or for economic reasons. The fact that the dismissal is abusive or without real cause does not exempt the employee from complying with their non-competition obligation.
The clause may apply in case of termination during the probationary period if this was the intention of the parties. It must apply to the employer's activity as it is carried out at the time of the termination of the contract without excluding a domain in which the company has become interested after the signing of the employment contract.
In the event of the closure of the company with the disappearance of the activity at the time of termination, the non-competition prohibition, having no purpose, ceases to exist.
Validity Conditions:
The rules established by practice and accepted by the courts consider that for the non-competition clause to be valid, it must: 1- Be limited in time: the duration of the period during which the employee cannot engage in any competing activity must be specified. This duration, not fixed by law, must be reasonable. It should be noted that in France, it cannot exceed two years for the activity of sales representatives (VRP). 2- Be limited in space: the territorial area where any competing activity is prohibited must be specified. Thus, a clause prohibiting the employee from any similar activity throughout Morocco is considered null and void. 3- Be limited as to the prohibited activity: the non-competition clause must not undermine the principle of freedom of work, i.e., it must allow the employee the possibility of normally exercising their professional activity.
Legitimate Interests:
Furthermore, for the clause to be valid, it must be indispensable for the protection of the employer's legitimate interests regarding the nature of the activity. Thus, a company cannot rely on the non-competition clause provided for in the employment contract of a secretary who is only entrusted with purely executive tasks. The non-competition clause cannot prevent the employee from setting up their own business after the termination of their contract when the professional activity concerned is entirely new, or so specialized that finding a new job elsewhere is practically impossible.
Monetary Consideration:
The collective agreement, the regulations, or the employment contract regulate this type of clause. They limit its duration, confine it to a specific area, require monetary consideration for the employee, and provide for notification deadlines for exemption from the execution of the clause. The non-competition clause is valid even if no monetary consideration is stipulated, and the absence of a compensatory indemnity in the contract does not release the employee from their non-competition obligations. Conversely, if the contract, regulations, or collective agreement provide for one, the employer must apply it. As long as it is accompanied by monetary consideration, a non-competition clause is stipulated in the interest of both the employee and the employer. The latter cannot unilaterally waive it if the employment contract does not expressly give them the possibility to do so, which must be explicit and unambiguous. The waiver cannot result from the mention on the work certificate: "Free of any commitment".
Waiver of Execution of the Clause:
The exemption from the execution of the clause must be stipulated in the collective agreement, regulations, or individual contract, as well as a short period, after the notification of termination, during which the exemption is notified to the employee. If an employer wishes to exempt an employee from their non-competition obligation, they must do so within the time limit, failing which they risk having to pay the employee the entire compensatory non-competition indemnity.
Non-compliance with the Clause:
The employee who, in violation of the non-competition clause, joins the service of a competing company can be pursued by their former employer for damages resulting from non-compliance with the clause, for cessation of unfair competition, and for payment of the monetary consideration.
On the other hand, when the employer does not pay the compensatory indemnity due to the employee within the specified period, the employee may either bring the employer to the labor court to enforce payment or join a competing company.
Responsibility of the New Employer:
When an employee, who has improperly terminated an employment contract, renews their services, the new employer is jointly liable for the damage caused to the previous employer in the following three cases:
1- When it is demonstrated that they were involved in soliciting the employee;
2- When they hired a worker whom they knew was already bound by an employment contract;
3- When they continued to employ a worker knowing that they were still bound to another employer by an employment contract.
Absence of Non-competition Clause:
In the absence of a non-competition clause, the freedom granted to the employee upon the expiration of their employment contract does not allow them, however, to engage in a similar activity to that of their former employer under unfair conditions.
Unfair competition presupposes misconduct by the employee but not necessarily fraud or deceitful maneuvers.
Acts resulting in the disorganization of the former employer's company, commercial disturbance caused to it, or confusion created in the minds of the clientele are deemed wrongful by jurisprudence.
The former employer, who is a victim of such acts, may bring an action for unfair competition against their former employee and the new employer when the latter has been rehired.
The prejudice, the proof of which must be provided by the former employer, is sovereignly assessed by the trial judges.
Payment of the Consideration:
The existence of monetary compensation for the employee is a condition for the validity of the non-competition clause only if imposed by the collective agreement, regulations, or individual contract.
When the convention simply provides for the need for such compensation, its application is automatic: the indemnity will be due even if the contract contains no provision to this effect.
The employer's failure to pay the indemnity releases the employee from the non-competition prohibition.
Judicial Discretion:
When the judges find that the conditions of the clause are so restrictive that they exceed the legitimate protection of the company's interests, they may reduce the amount of the indemnity, the duration of the prohibition, or its geographical limit.
The non-competition clause in an employment contract must be justified by the legitimate protection of the company's interests, and the judges may declare it null and void if it is established that it was imposed by the employer solely to harm the employee or to prevent them from leaving their job.
Courts and the Clause:
In 1997, a pharmaceutical laboratory in Casablanca, to recruit qualified personnel, had no better idea than to poach the employees it needed from a competitor, offering them a slight increase in salary.
After a 3-year trial, the employees, who had underestimated the non-competition clause to which they were bound with the first employer who provided their training, were, in the first instance as in the appeal, sentenced to pay substantial sums representing several years of work.
Unable to pay these sums, the employees are now under the threat of coercive measures. The "poacher", on the other hand, is unlikely to pull off the same stunt twice.
Omar Touzani
Lawyer court