Newsletter No. 97 – January 2017

The French Supreme Court (Cour de cassation) definitively overturns its previous case law, considering that the meal allowance (the purpose of which is to compensate the extra cost of a meal due to particular working conditions) and the transport allowance constitute a reimbursement of expenses, if they are granted in consideration of hardship related to the organization of the work. If they compensate or indemnify the employee because of specific employment conditions, the Court indeed considers that they “constitute, despite the fact that they are fixed and that their payment is not subject to providing any justification, a reimbursement of expenses and not an additional pay”. Such solution of principle is very much in favor of employers, since these allowances are no longer part of the calculation of the pay continuation indemnity for illness, or of the basis for calculation of the paid holiday indemnity (Cass. Soc., 11 January 2017, No. 15-23.341).

The French Supreme Court was requested to decide whether an anticipated potential decrease in the subsidies was a valid ground for dismissal for economic reasons. On this occasion, the High Jurisdiction underlines “that a reorganization of the company constitutes a ground for dismissal only if it is carried out in order to protect the competitiveness of the company or of the activity sector of the group it belongs to, by preventing future economic difficulties and their consequences on employment”. Hence, a dismissal decided in relation to a restructuring aiming at making savings “in order to prevent potential difficulties particularly in case of a decrease in territorial subsidies” does not constitute a ground for dismissal for economic reasons that is compliant with the provisions of article L. 1233-3 of the French Labour code (Cass. Soc. 14 December 2016, No. 15-24.500).

When an employer grants to his employees a bonus (whatever its name) which is not provided for by a collective bargaining agreement or by the employment contract, it may become a company’s custom. However, the French Supreme Court underlines that, for this purpose, the employee must prove that the payment of said bonus “complies with the criteria of stability, generality or fixity, be it in its amount or its calculation mode”. Hence, a Christmas bonus and an exceptional bonus, paid to all the employees but the amount of which varies year after year, do not constitute a custom and are purely discretionary (Cass. Soc. 11 January 2017, No. 15-15.819).

In four decisions delivered on 19 January 2017, the French Supreme Court had to deal with the question of the law applicable to transnational work relations. In one of these cases, an employee hired by an English company and based in London, had had his place of work located at his residence in Paris by way of an amendment. On termination of his contract, the employee requested the application of French law, which was denied to him by the Court of appeal, which had noticed that he was doing a lot of travelling abroad and worked in close relationship with his team in London. The French Supreme Court does not follow the Court of appeal, considering that since the latter had “noticed that the place of work of the employee was contractually set to be in Paris, without noting elements from which it would have resulted that the usual place of performance of the contract would not have been France”, this solution could not be upheld (Cass. Soc. 19 January 2017, Nos. 15-23.274, 15-20.095, 15-13.599, 15-22.835).

The provisions of article L. 1232-6 of the French Labour code require the dismissal to be notified in writing and accounted for, which excludes any verbal dismissal. In this case, the employer had orally requested an employee to immediately leave the company, following which he had sent him an invitation to attend a pre-dismissal meeting. The decision of the Supreme Court is unambiguous, considering that “the employer had given the order to the employee to leave the company”, resulting in his making a verbal dismissal that could not be regularized later on by the sending of an invitation to attend a meeting prior to a potential dismissal” (Cass. Soc., 10 January 2017, No. 15-13.007).

The decree and administrative order are delivered for the implementation of the law of modernization of the 21^st century justice, dated 18 November 2016. Pursuant to this law, the employer has, since January 1^st, 2017, the obligation to disclose the identity of the employee driving a company vehicle and having committed an offence detected by an automatic radar. These offences are determined by a decree, among which: failing to fasten your seatbelt, using a telephone while holding it in your hand, not complying with the speed limits or safety distances. The administrative order specifies the modalities of the sending by the employer of the employee’s contact details (Decree No. 2016-1955 dated 28 December 2016, JO of 30 December, Administrative order dated 15 December 2016, JO of 22 December).

The social section of the law relating to equality and citizenship has, mostly, been validated by the French Constitutional Court. In particular, the provisions aiming to harmonize the discrimination cases at work or create of a class action financing fund have been suppressed. All these measures entered into force on 29 January 2017, except for those requiring an enforcement decree. This law particularly aims to further the social integration of the young, fight against discriminations and encourage civic commitment (L.  No. 2017-86 dated 27 January 2017, JO 28 January, CC No. 2016-745).

Among the “key” measures there is in particular the extension to any illegal work infringement of the suppression of the measures of exemption from social security contributions, the definition of the contributions’ triggering event as “the period of time to which the income is assigned” and the reinstatement of the subjection to social contributions, from the 1^st Euro, of severance pays exceeding 10 times the social security annual limit (L. No. 2016-1827 dated 23 December 2016, JO of 24 December).