Newsletter No. 67 – July 2014

The French Supreme Court recently considered that “in the absence of a subordination relationship, a company belonging to a group may only be deemed a co-employer of staff employed by another company if there exists between the two companies a confusion of interests, activities, and management manifested by interference in the economic and social management of the latter company, excluding the need for companies belonging to the same group to coordinate their economic activities and any state of economic domination which such membership in the group might bring about.” In this case, it held that “even though the subsidiary’s officers came from the group and the parent company made group policy decisions affecting the future of the subsidiary and undertook to provide the resources necessary to finance the social measures relating to the closure of the site and the elimination of jobs, this cannot be deemed sufficient to classify a situation as one of co-employment” (Cass. Soc., 2 July 2014, no.13-15.508).

Article L.311-2(2) of the French Labour Code provides that “are considered as executive officer (“cadre dirigeant”), managers who have been entrusted with significant duties implying a high degree of independence in the organisation of their working time, managers who have been empowered to make decisions in a largely autonomous fashion, and managers who receive remuneration falling under the highest remuneration schemes in effect within their company or institution.” The French Supreme Court pointed out that “the combination of these criteria implies that only those managers involved in the executive management of the company belong to this category.” (Cass. Soc. 2 July 2014, no.12-19.759).

After being dismissed following a refusal to be transferred, employees challenged the validity of their mobility clause, which was worded as follows: “given the nature of their duties, Mr/Ms undertakes to accept any change in their workplace required by the interests or operation of the company within the geographical limits of the French territory, with it being understood that said change shall not constitute an amendment of the employment contract.” Whereas the Court of Appeal agreed with the employees, considering that the geographical scope of the clause was not sufficiently precise, the French Supreme Court held instead that this “mobility clause precisely set out the geographical area of its application and did not allow the employer to unilaterally extend its scope.” (Cass. Soc., 9 July 2014, no.13-11.906).

Following the Act of 14 June 2013, the labour administration (named Direccte) must approve job-saving schemes resulting from unilateral decisions by employers or approve job-saving schemes negotiated with union representatives. In line with the arguments advanced by the unions in support of their petition, an administrative court revoked the approval of a job-saving scheme on the grounds that the scope used for the application of the criteria for the order of dismissals did not comply with the principle of objectivity. In this case, the judges held that “such scope was justified neither by the importance of the dismissals planned under the court-ordered liquidation proceedings nor the new owner’s need to rapidly resume activities”. Accordingly, in approving the job-saving scheme, the administrative authorities committed an error of assessment. (TA Cergy-Pontoise, 11 July 2014, no.1404370).

An employee petitioned a labour court to annul a disciplinary sanction. Theiremployer requested the case be referred toanother court, citing a “legitimate suspicionrelated to the employee’s duties as union-appointed counsel before the labour court inquestion.” The trial court considered thatthis did not constitute “an element callinginto question the impartiality of councillorsbelonging to the same union organisation.” The French Supreme Court set aside thisruling under Article 6§1 of the EuropeanConvention for the Protection of Human Rights and Fundamental Freedoms. In thecourt’s view, “the fact that a partyordinarily carries out the duties of union-appointed counsel before a court is liable tocreate a doubt with regard to the objectiveimpartiality of the court in question.” (Cass. Soc. 24 June 2014, no.13-13.609).

Unédic (French unemployment fund) points out that new rules on compensation are applicable to employees whose employment contracts expire after 30 June 2014.However, in the case of redundancies foreconomic reasons, the new rules apply onlyto dismissals initiated as of 1 July 2014. Therules regarding the resumption of paymentof allowances and the recharging of rightsshall come into force on 1 October 2014.Measures relating to contributions are to beapplied to remunerations paid as of 1 July2014. (Circ. Unédic no.2014-19 of 2 July 2014).

Henceforth, the obligation to provideinformation in the fields of gender equality,moral and sexual harassment and workplaceelections may be carried out by any means.Employers are therefore no longer requiredto display such information but may, forexample, choose to disseminate themelectronically (Ord. no.2014-699 of 26 June2014, JO of 27 June).

The new Article L. 1451-1 of the Labour Code provides that “when the labour court is petitioned to qualify the termination of an employment contract by an employee on the grounds of behaviour of the employer criticised by the employee, the case shall be directly heard before the judgment section,which shall rule on the merits within one month of the referral to the tribunal” (L.no.2014-743 of 1 r July 2014, JO of 2 July).