The pursuit of a competing activity by an employee as a self-employed entrepreneur constitutes serious misconduct

Court of cassation, Social Division, 14 january, 2026, n° 24-20.799

While it may be permissible to combine salaried employment with self-employment, the employee remains bound by the duty of loyalty inherent in the employment contract. They are therefore prohibited from engaging in an activity that competes with that of their employer.

In this ruling, the Court of Cassation clarifies the contours of a breach of this obligation.

In this case, a carpenter employed by a building construction and carpentry company was also working as a self-employed entrepreneur, carrying out carpentry work. The employer considered this activity to be competitive and dismissed the employee for serious misconduct.

The Court of Appeal ruled that the dismissal was unjustified, noting that :

• the employee was not bound by a non-competition clause ;
• the employee was not required to obtain prior authorisation from his employer ;
• the employer did not demonstrate that the employee was working during his working hours or that he was using company equipment or even poaching his clients ;
• this self-employed activity was residual, since the employee had generated turnover of €2,581 excluding VAT in four months, with a net accounting loss of €1,997.

The Court of Cassation did not agree with this analysis and overturned the ruling, stating that : « The fact that an employee creates and operates a business as a self-employed entrepreneur that directly competes with one of their employer’s businesses constitutes serious misconduct. It is irrelevant that this activity was residual and that it was carried out, as was its advertising, outside working hours and without the use of company equipment. »

In this way, the Court of Cassation refocuses the analysis solely on the characterisation of the direct competition between the employee’s activity and that of his employer, which is sufficient to constitute serious misconduct.