France Update: Compensation for dismissal without real and serious cause: the Court of Cassation validates the “Macron” scale

By two long-awaited judgments delivered on May 11, 2022, the Social Chamber of the Court of Cassation validated the compensation scale in the event of dismissal without real and serious cause, known as the “Macron” scale, instituted in 2017 and codified in Article L. 1235-3 of the Labor Code.

The High Court thus put an end to a judicial saga that, for five years, had seen several courts break free of the limits set by this scale to compensate more generously employees unjustly dismissed, on a case-by-case basis.

The scale had been deemed to be in conformity with the Constitution in a decision of the Constitutional Council dated 21 March 2018 (No. 2018-761), but several industrial tribunals and courts of appeal had ruled out its application on the basis of international conventions.

The European Social Charter has no direct effect…

In one of the cases (No. 21-15.247), the employee had invoked the benefit of Article 24 of the European Social Charter, which provides for the right of workers dismissed without good reason to receive “adequate” compensation, which the “Macron” scale would not allow in certain circumstances.

As it had already implicitly held with regard to annual packages in days (Cass. Ploughshare. 29 June 2011, n°09-71.107), the Court of Cassation considers that this Charter has no direct effect in a dispute between individuals, in particular because it creates obligations only for the signatory States and that the control of compliance with this standard is entrusted to the European Committee of Social Rights (ECSR), which is not of a judicial nature.

… unlike ILO Convention No. 158…

In the second case (No. 21-14.490), the Paris Court of Appeal had rejected the “Macron” scale on the basis, this time, of Article 10 of Convention No. 158 of the International Labour Organization (ILO), which also provides for the payment of “adequate” compensation in the event of unjustified dismissal.

As the plenary session of the Court of Cassation had already ruled in two opinions delivered on 17 July 2019 (Nos. 19-70.010 and 19-70.011), the Social Chamber considers that, unlike the European Social Charter, the ILO Convention has direct effect in domestic law, after noting that it recognises the rights of workers, that its stipulations do not require additional legislation to be defined and that its implementing rules are left to the discretion of the judges.

… which, however, does not allow an in concreto assessment of the damage suffered by the employee unjustly dismissed

It was then for the Court of Cassation to define whether the review of the conventionality of the “Macron” scale in the light of ILO Convention No. 158 should be assessed in concreto, as the Court of Appeal had held and supported the employee, or in abstracto.

The Court of Cassation considers that the “Macron” scale meets the requirements set by the ILO Governing Body which, in 1997, had decided that compensation is “adequate” when, on the one hand, it is sufficiently dissuasive to avoid unjustified dismissal and, on the other hand, it reasonably allows compensation for unjustified loss of employment.

In the second judgment of 11 May 2022, the High Court noted that:

–       The deterrent nature of the compensation is ensured by the mechanism for the reimbursement of unemployment benefits to Pôle Emploi, within the limit of six months (Article L. 1235-4 of the Labour Code);

–       The seriousness of the employer’s fault is taken into account, since the application of the scale is excluded in the event of nullity of the dismissal for one of the causes defined by law: violation of a fundamental freedom, acts of moral or sexual harassment, discrimination, lack of knowledge of legal protection (mandate of staff representative, pregnancy and maternity, accident at work and occupational disease, etc.) ; in this case, the judge must grant the employee who does not request his reinstatement an indemnity that may not be less than six months’ salary, without any ceiling (Article L. 1235-3-1 of the Labour Code);

– Apart from cases of nullity, the “Macron” scale provides for compensation between minimum and maximum amounts varying according to the seniority of the employee and, indirectly, the amount of his salary, which allows the judge, in an individualized way, to assess the concrete situation of the employee to determine the amount of compensation due, but between the floor and the ceiling set by the scale.

In conclusion, the Court of Cassation ruled that the “Macron” scale is compatible with Article 10 of ILO Convention No. 158. It rejects the assessment in concreto (which would have allowed the court to depart from the scale according to the circumstances of the case), considering that such an assessment would infringe the principle of equality of citizens before the law, that of legal certainty, and the intention of the legislature. In its explanatory note, the Court of Cassation notes that “there would have been a great risk of replacing the legislator’s scale with a judge’s scale according to reasons inherent in the person of the employee, without having the same legitimacy“.

What lessons?

The merit of the two decisions rendered on May 11, 2022 is, in accordance with the intentions of the legislator, to offer greater predictability to employers and employees: the former know their risks when making a dismissal, and the latter know their hope of gain when challenging this measure.

To escape the cap on compensation, many employees, without waiting for these decisions, have placed themselves and will still place themselves on the ground of the nullity of the termination, sometimes in a justified way, sometimes in a more artificial way simply to circumvent the compensation restrictions that have just been enshrined by the High Court.

By Nicolas Lepetit, France, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact france@transatlanticlaw.com

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