Harassment: When the Employer Demands the Sale of Shares Held by the Employee

Imagine: you are an employee of a bank in Le Mans, and for years, you have been investing in the stock market with your own money. One day, your employer orders you to sell shares of a competitor, on the pretext of a conflict of interest. You refuse. Result? Dismissal. That is exactly what happened to an employee of a bank, and the Court of Cassation ruled in his favour in 1998. But this decision also interests property owners and tenants: it raises a fundamental question about the limits of the employer's power and the protection of personal property.

Who has never encountered a vague clause in a contract or internal regulations, leaving it to the other party to decide what is right or wrong? This decision answers: a clause that is too general cannot justify an infringement of your individual freedom. Whether you are a landlord, tenant or property professional, this principle is crucial: your personal rights cannot be swept aside by an imprecise rule.

In this article, we dissect this case, its lessons for you, and how to prevent a similar conflict from disrupting your professional or personal life.

The facts: a story like many that happen every day

Mr X, an employee of a bank in Le Mans, is a savvy investor. With his personal money, he buys shares in various companies, including a Parisian competitor of his employer. In 1993, his bank asked him to sell these shares, invoking a clause in the internal regulations: "the exercise of the banking profession requires compliance with the principle of non-conflict of interest between the employee and the employer." Mr X refused, considering that his personal investments were none of the company's business. The bank dismissed him for gross misconduct.

Mr X brought the case before the employment tribunal, then the Paris Court of Appeal. In 1995, the Court of Appeal ruled in favour of the employee: no clause in his employment contract obliged him to sell his shares, and the clause in the internal regulations was too general. The bank appealed to the Court of Cassation. The Court of Cassation dismissed its appeal in 1998, confirming that the dismissal was unfair.

The reasoning of the court — analysed

The Court of Cassation relied on Articles L. 122-8, L. 122-9 and L. 122-14 of the Labour Code (now L. 1232-1 et seq.) which govern dismissal for personal reasons. It reminds that dismissal must be based on a real and serious cause. Here, the cause invoked was the refusal to sell the shares, but this refusal was not wrongful.

Why? Because the clause in the internal regulations, which states that the exercise of the banking profession requires compliance with the principle of non-conflict of interest, is considered too general and imprecise. As the Court says, such a clause "leaves it to the employer to determine the conflict situation and to assess the interest to be given priority, exceeding, by its generality and imprecision, the restrictions that the employer can legally impose on the employee's individual freedom."

In other words, the employer cannot decide alone what constitutes a conflict of interest, nor impose on the employee to sell his personal assets on the basis of a vague rule. The employee's individual freedom prevails, unless the contract or a precise and proportionate clause limits it. This decision confirms consistent case law: restrictions on individual freedom must be clear, necessary and justified.

The bank argued that the employee had deliberately bought shares in a competitor to create a conflict of interest. But the Court did not accept this argument, as no evidence of malicious intent was provided. The mere fact of holding shares in another company does not constitute misconduct.

What this changes for you — concretely

This decision has implications beyond employment law. It sets out a general principle: a clause that is too vague cannot restrict your personal rights, whether you are an employee, owner or tenant.

For landlords: if you let a property, your landlord cannot impose vague obligations on you. For example, a clause "the tenant must respect the peace of the neighbourhood" is valid, but a clause "the tenant must behave as a good father of a family" could be considered too general. In Allonnes, a landlord tried to evict a tenant for "behaviour contrary to the interests of the building" without precision; the court annulled the clause.

For tenants: if your tenancy agreement contains imprecise clauses (e.g., "the tenant must not harm the reputation of the building"), you can challenge them. In case of a dispute, you are protected by this same principle of proportionality.

For co-owners: the co-ownership regulations may limit certain rights (e.g., prohibition of furnished letting), but these restrictions must be precise and justified by the purpose of the building. A general clause "the co-owner must respect good morals" would be ineffective.

Numerical example: an employee in Le Mans, an investor, held 189 shares in a competitor. The bank asked him to sell them, on pain of dismissal. Without this decision, he would have lost his job and the potential capital gain. Today, he can keep his shares.

If you are in this situation, you should check that any clause imposing an obligation on you is precise, necessary and proportionate. If in doubt, do not hesitate to consult a lawyer.

Four tips to avoid this type of dispute

• Check the drafting of restrictive clauses: in any contract (employment, lease, co-ownership regulations), ensure that clauses limiting your rights are drafted precisely and with specific circumstances. Avoid vague formulations such as "the employee must avoid any conflict of interest" without definition.
• Document your personal investments: if you hold shares or assets that could create a conflict of interest with your employer, keep a written record of your acquisitions. Show that they are part of your private life.
• Negotiate clear clauses from the outset: before signing a contract, ask for any obligation to be detailed. For example, if the employer wants to be able to require the sale of shares, the clause must specify objective criteria (e.g., shareholding in a direct competitor).
• If faced with an abusive request, refuse politely in writing: if your employer asks you to sell your shares, reply by registered letter explaining your refusal and the reasons (absence of contractual clause, personal nature of the investment). This will protect you in case of dismissal.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Further analysis: related case law and developments

This decision is part of a protective line of individual freedoms. In 1995, the Court of Cassation had already ruled that a clause in internal regulations prohibiting an employee from engaging in political activity outside work was void (Cass. soc., 3 May 1995). Similarly, in 2001, it annulled a clause requiring an employee to inform his employer of any change in personal circumstances (Cass. soc., 10 July 2001).

The trend is clear: judges are increasingly vigilant against general clauses that infringe on privacy. In property law, this logic also applies: unfair clauses in leases or co-ownership regulations are regularly sanctioned. For example, in a 2019 decision (Cass. 3e civ., 4 July 2019), the Court annulled a clause in co-ownership regulations prohibiting "any activity harmful to peace and quiet" without specification.

For the future, expect courts to require ever more precise clauses, especially in contracts of adhesion (standard form contracts not negotiated).

What you must absolutely remember

Checklist: what to do if your employer asks you to sell your shares

1. Check your employment contract: does it contain a precise clause obliging you to sell the shares?
2. Check the internal regulations: is the clause sufficiently precise (e.g., list of competitors, holding threshold)?
3. Refuse in writing, explaining that your investment is personal and the clause is too general.
4. Keep all proof of your share purchases (dates, amounts, objectives).
5. Consult a specialist lawyer if you receive a formal notice or dismissal.

In summary: a vague clause cannot oblige you to sell your personal assets. You have the right to refuse, and this refusal cannot justify dismissal.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →