France Update: DISMISSAL FOR ECONOMIC REASONS

By two judgments dated the same day, 5 April 2023, the Social Chamber of the Court of Cassation provided important clarifications on the dismissal procedure for economic reasons.

CONSULTATION OF STAFF REPRESENTATIVES IS NOT NECESSARY IN THE EVENT OF DISMISSAL FOR INDIVIDUAL ECONOMIC REASONS

An employer who “considers” proceeding with a “small” collective dismissal for economic reasons (2 to 9 employees over a period of 30 days) must convene and consult his CSE, i.e. the social and economic committee (art. L.1233-8 C.trav.).

In this first case, the employer had planned to abolish three posts but, since two of the three employees had been able to be reclassified internally, only one of them was still affected by a dismissal measure. This employee had nevertheless maintained that the company should have consulted the staff representatives (which it had not done), since it had initially envisaged three job cuts, and therefore three redundancies. The reasoning was logical, since the text refers to redundancies only envisaged; moreover, the employee had been followed by the Court of Appeal. However, this decision was censured by the Court of Cassation, which ruled on the contrary that, since two of the three employees had accepted their internal redeployment, dismissal had been envisaged in respect of only one of them and, therefore, the staff representatives did not have to be consulted in this case.

This decision, which has the effect of easing the obligations incumbent on employers, is however not legally convincing, since the proposals for redeployment are part of the dismissal procedure for economic reasons and must in principle follow the consultation of the CSE. Moreover, the procedure applicable in this matter depends on the workforce of the company and the number of dismissals envisaged, which must be assessed at the time of initiation of the procedure, regardless of the number of dismissals that will actually occur (Cass. Soc. 12 October 2004, No. 02-40.685). This decision is therefore surprising, especially since it is published in the Bulletin of Judgments of the Court of Cassation, which thus recognizes its doctrinal significance.

In any case, companies must remain cautious. Indeed, even when they only envisage dismissal for individual economic reasons, they may be required to consult their CSE.

On the one hand, such a measure can be part of a reorganization and/or have consequences on the organization, impacting several employees. In this case, in enterprises with at least 50 employees, the CSE should be consulted as part of its general economic powers, in the event of a restructuring and downsizing project or, more broadly, if the question concerns the organization, management or general operation of the enterprise, in particular the size of the workforce or working conditions (art. L.2312-8 and L.2312-39 C.trav.).

On the other hand, even in the event of dismissal for individual economic reasons, the employer may have to take into account, for the choice of the employee concerned, criteria of order which are defined after consultation with the CSE (art. L.1233-5, L.1233-7 C.trav. ; Cass. Soc. 21 June 1994, No. 93-40.670). It is not excluded that this 2023 judgment will help to call into question this old case-law position, the basis of which is also questionable.

IN CASE OF ACCEPTANCE OF A CSP, THE REASON FOR TERMINATION CAN BE SPECIFIED WITHIN 15 DAYS

Except in very large companies, the employer who plans to make one or more redundancies for economic reasons must offer his employees a support system called a professional security contract (CSP). If the employee joins the CSP, the employment contract is automatically terminated at the end of a reflection period of 21 days. The employer must inform the employee of the economic reasons for the proposed termination and their impact on employment, at the time of submission of the documentation, or in the letter of dismissal possibly notified as a precautionary measure, and in any case, at the latest, at the time of acceptance of the device.

In addition, since 2018, the employer may specify the “reasons set out in the letter of dismissal” after the notification of the latter, spontaneously or at the request of the employee, within 15 days (art. L.1235-2, R.1233-2-2 C.trav.).

Even if the proposal for a CSP is part of a dismissal procedure for economic reasons, and this provision is provided for in the part of the Labour Code relating to dismissal for economic reasons, the termination of the employment contract occurs, in this case, not by notification of a letter of dismissal, but because of the employee’s membership of the CSP (art. L.1233-67 C.trav.). Moreover, the regime differs on a few points since, in the event of membership of the CSP, and unlike dismissal, the employee does not receive any (compensatory) compensation for notice and the administration does not have to be informed of the termination (excluding PES and dismissals notified as a precautionary measure) (art. L.1233-19, L.1233-67, D.1233-3 C.trav.). It was therefore not self-evident that the employer could specify the reasons for the termination within 15 days, as is expressly authorised in the event of dismissal.

Yet this is the position adopted by the Court of Cassation in its second judgment of 5 April 2023. In this case, the employees had been given the CSP form during their preliminary interview on 21 September 2018 and had joined it on 27 September 12, with effect from 9 October. Meanwhile, on 15 October, the employer had specified the reasons for the termination in a written document (letter of dismissal as a precautionary measure). The High Court considers that the company had been able to validly specify the reasons within <> days of joining the CSP.

Companies must remain vigilant because, while the employer can specify a posteriori the reasons for the planned termination, he cannot, on the other hand, add new reasons. It is therefore imperative that an information document be given to the employee as soon as the CSP form is submitted, since the employee can join this system the same day.

Ginestié Magellan Paley-Vincent, France, a Transatlantic Law International Affiliated Firm.  

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

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