Newsletter No. 19 – Social Law
SUMMARY
REGULATION
- Fraud related to the posting of workers and illegal employment:
Decree of March 30, 2015 - Umbrella company services
- Order of April 2, 2015 - National collective agreement for architectural, urban planning and environmental consultancies.
Decree of March 11, 2015
CASE LAW
I. Contract and execution of the employment contract
… of March 11, 2015 Mention concerning the end-of-contract bonus in the temporary employment contract
… of March 18, 2015 Time savings account and compensatory rest
II. Termination of the employment contract
… of March 17, 2015 Professional Security Contract
… of March 25, 2015 Redeployment: prior consultation with staff representatives
… of April 9, 2015 Wearing of religious symbols in the workplace
… of March 17, 2015
Age discrimination – Intergenerational Pact
… of March 11, 2015 Waiver of the non-compete clause
… of March 25, 2015
Terms of termination of the employment contract
… of March 3, 2015
Negotiated termination and statute of limitations for disciplinary proceedings
… of March 3, 2015
Termination and exercise of the employer's disciplinary power
… of March 25, 2015
Effect of concluding a settlement between the signing and the approval of the termination
… of April 1, 2015
Tax regime applicable to the settlement
… of March 31, 2015
Calculation of the AGS guarantee: ceiling Claims
… of March 31, 2015
Wages due in the event of dismissal without just cause
… of March 31, 2015
Dismissal – Proof
… of March 27, 2015
Dismissal of a protected employee
… March 31, 2015
Fundamental freedoms of the employee
Regulation
Combating unfair social competition
The decree of March 30, 2015, was issued to implement certain provisions of the law of July 10, 2014, aimed at combating unfair social competition, and to transpose directives relating to the posting of workers.
The law aimed at combating unfair social competition established new obligations for both employers posting staff and the client company. The decree of March 30 specifies these obligations, the procedures for their implementation, and the penalties for non-compliance.
Obligation of prior notification to the labor inspectorate:
The decree specifies the obligations now incumbent upon employers established outside France who post employees to France with regard to:
- prior declaration of this detachment;
- appointment of a representative in France;
- retention of documents to be presented in case of inspection.
Similarly, the procedures for implementing the liability of the contracting party in the event of a failure to comply with the obligation to submit a prior declaration or to appoint a representative, as well as the applicable penalties, are established by this new text.
The conditions under which copies of posting declarations are appended to the single personnel register of the company hosting the posted workers are determined by the decree.
Duty of Vigilance:
The law has created a duty of vigilance for the project owner and the client regarding accommodation and the application of social legislation. The decree specifies the conditions for implementing this duty of vigilance and the liability of project owners and clients with respect to subcontractors and other contracting parties.
Legal action by the unions
The power of trade unions to take legal action has been expanded by the law aimed at combating unfair social competition. Unions can now act on behalf of employees even without a mandate from them. To this end, the decree specifies the procedures for informing employees by the unions.
Umbrella company
The government has issued an ordinance concerning umbrella employment. Published in the Official Journal on April 3, 2015, the ordinance defines umbrella employment and specifies the conditions for using and prohibiting its use. Furthermore, the text determines the nature and specific characteristics of the contracts between the employee and the client company, respectively, and the umbrella company. Finally, the ordinance sets out the conditions under which umbrella companies operate.
Collective agreements
Pursuant to the decree of 11 March 2015 extending an amendment to the national collective agreement for architecture, urban planning and environmental councils (no. 2666), the provisions of amendment no. 18 of 13 May 2014 relating to the modification of the compulsory pension scheme and portability, to the aforementioned national collective agreement are made mandatory for all employers and all employees within the scope of the national collective agreement for architecture, urban planning and environmental councils of 24 May 2007.
Case Law
Clause regarding the end-of-contract bonus in the temporary employment contract
Soc. March 11, 2015 (n°12-27.855) FS-PB:
The Court of Cassation has ruled on the implications of omitting the clause relating to the so-called "end-of-assignment" or "precariousness" allowance in a temporary employment contract. The Court clarified that "subject to fraudulent intent on the part of the employee, the temporary employment agency's failure to comply with any of the requirements of Article L. 1251-16 of the French Labor Code, which aim to ensure compliance with the conditions under which any temporary staffing arrangement is prohibited, results in the reclassification of the contract as a permanent employment contract.".
Time savings account and compensatory rest
Soc. March 18, 2015 (No. 13-19.206) FS-PB: If it follows from the provisions of Articles L. 3121-24 and D. 3121-10 of the Labor Code that the employer may, in the absence of a request from the employee to take the mandatory compensatory rest, impose on this employee, within a maximum period of one year, the day or days of actual rest, these provisions are not applicable to compensatory rest days allocated to a time savings account.
Professional security contract
Soc. March 17, 2015 (n°13-26.941) FS-PB:
The Court ruled for the first time on the implementation of the Professional Security Contract (CSP) introduced in 2011. In this case, during a preliminary meeting prior to dismissal for economic reasons, an employee was offered membership in a CSP.
The employee joined the CSP and then filed a claim with the labor court seeking compensation for wrongful dismissal and dismissal without just cause.
The Court of Appeal found that the employer had failed to establish employee representatives, despite being subject to this obligation, and that no official report of failure to do so had been drawn up. Consequently, the court held that the harm suffered by the employee should be compensated.
The Court of Cassation rejected the employer's appeal, which argued that joining a CSP deprived the employee of the opportunity to challenge the legality of the dismissal procedure. Indeed, according to the Court, joining a professional security contract constitutes a method of dismissal for economic reasons and does not deprive the employee of the right to obtain compensation for the harm caused by the irregularity of the letter of summons to the preliminary interview.
Reassignment: prior consultation with staff representatives
Soc. March 25, 2015 (n°13-28.229) FS-PB:
In this case, an employee who was declared unfit for his position and subsequently dismissed brought a claim before the labor court seeking damages for failure to comply with the dismissal procedure.
The Court of Appeal held that the employee had refused two offers of reassignment without consulting the employee representatives and dismissed his claims.
The Court of Cassation overturned the decision, ruling that the opinion of the employee representatives regarding the employee's reassignment must be obtained after the employee's unfitness for work resulting from a workplace accident or occupational disease has been established, and before the employee is offered a suitable reassignment position.
Wearing religious symbols in the workplace
Soc. April 9, 2015 (n°13-19.855):
The Social Chamber refers the following question to the Court of Justice of the European Union: "Should the provisions of Article 4(1) of Council Directive 78/2000/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation be interpreted as meaning that the wish of a client of an IT consulting firm to no longer have the firm's IT services provided by an employee, a research engineer, wearing an Islamic headscarf, constitutes a genuine and determining occupational requirement, by reason of the nature of the professional activity or the conditions under which it is carried out?"
Age discrimination – Intergenerational pact
Soc. March 17, 2015 (n°13-27.142) FS-PB:
Ski instructors appealed to the High Court seeking to overturn the intergenerational agreement adopted by the French National Ski Instructors' Union, which regulated the reduction of instructors' working hours starting at age 62. The Court of Appeal held that integrating newly qualified young ski instructors was a legitimate objective and rejected the instructors' claim. The Court of Cassation overturned the Court of Appeal's reasoning. It held that the Court of Appeal should have determined, firstly, that the difference in treatment based on age was objectively and reasonably justified by a legitimate objective of general interest, and secondly, that the means used to achieve this objective were appropriate and necessary.
Waiver of the non-compete clause
Soc. March 11, 2015 (n°13-22.257) FS-PB:
In this case, an employment contract contained a non-compete clause for a period of one year from the date of termination. Renewable once, the clause specified that the company could lift or reduce the non-compete restriction by registered letter with acknowledgment of receipt, no later than eight days following notification of termination. The employer released the employee from the non-compete obligation by letter dated April 7, 2010, and subsequently dismissed him on June 28, 2010. The employee then brought the matter before the labor court.
The Court of Appeal held that the employee's argument that the employer could not waive the clause before notification of termination was incorrect, since the contract stipulated that the employer could waive the benefit of the non-compete clause only if this waiver was notified to the employee within eight days of notification of termination.
The Court of Cassation overturned the Court of Appeal's decision. In support of its ruling, the Court first clarified that "the non-compete clause, the validity of which is contingent upon the existence of financial compensation, is stipulated in the interest of each party to the employment contract." The Court then concluded that "the employer cannot, unless otherwise stipulated, unilaterally waive this clause during the term of the contract."
Terms and conditions for terminating an employment contract
Soc. March 25, 2015 (n°14-10.149) FS-PB:
An employee and her employer signed a termination agreement three days after the employee returned from maternity leave. The employee then filed a claim with the labor court regarding both the performance and the termination of the contract. According to the employee, the termination, concluded during the protected period following maternity leave, was invalid. The Court of Cassation upheld the Court of Appeal's decision rejecting this claim and reiterated that, except in cases of fraud or vitiated consent, which were not alleged in this case, a negotiated termination agreement can be validly concluded during the periods of suspension of the employment contract to which the employee is entitled under her maternity leave, as well as during the four weeks following the expiration of these periods.
However, the Court of Cassation partially overturned the Court of Appeal's decision insofar as it rejected the claim for damages based on the existence of wage discrimination. Indeed, the Court of Cassation specifies that the Court of Appeal should have carried out a comparative analysis of the situation, functions and responsibilities of the person concerned with those of other sales engineers and not simply noted that the employee worked in a different geographical area than another sales engineer to consider that the two employees were not in comparable situations and reject the employee's claim.
Negotiated termination agreement and statute of limitations for disciplinary proceedings
Soc. March 3, 2015 (n°13-23.348) FP-PB:
An employer and an employee signed a termination agreement on October 28, 2010, but the employee withdrew it on November 5. On November 16, the employee was summoned to a pre-dismissal meeting, and the dismissal was notified to him on December 6 for unauthorized absences. The Court of Appeal noted that disciplinary proceedings were initiated late and ruled that the dismissal was without just cause.
The employer appealed, arguing in particular that the statute of limitations for initiating disciplinary proceedings, which can lead to dismissal, is interrupted by any act unequivocally demonstrating the employer's intention to take action regarding the consequences of the misconduct.
The Court of Cassation rejected the appeal because a negotiated termination agreement does not interrupt the two-month statute of limitations stipulated in Article L.1332-4 of the French Labor Code.
Termination and exercise of the employer's disciplinary power
Soc. March 3, 2015 (n°13-15.551) FP-PB:
In this case, an employee summoned for a preliminary meeting regarding potential dismissal on June 7, 2010, signed a mutual termination agreement that same day and then exercised his right of withdrawal by letter dated June 16, 2010. Summoned by letter dated June 21, 2010, to a further preliminary meeting regarding potential dismissal scheduled for June 28, he was dismissed for serious misconduct by letter dated July 1, 2010. Having been
unsuccessful in his appeal to the Court of Appeal, which sought a ruling that the dismissal was not justified by serious misconduct, the employee appealed to the Court of Cassation. In support of this appeal, the employee argues that the employer, by choosing to offer a mutual termination agreement on the date it became fully and accurately aware of the facts attributable to the employee, thereby waives the right to initiate disciplinary proceedings against him for those same facts.
The Court of Cassation upheld the appeal court's decision, ruling that the signing of a negotiated termination agreement by the parties to the employment contract, after disciplinary dismissal proceedings had begun, does not constitute a waiver by the employer of its disciplinary authority. Consequently, if the employee exercises their right to withdraw from the negotiated termination agreement, the employer is entitled to resume the disciplinary proceedings by summoning the employee to a new preliminary interview, in accordance with the provisions of Article L. 1332-4 of the French Labor Code, and to impose a sanction, including dismissal for serious misconduct.
Effect of concluding a transaction between the signing and the approval of the termination
Soc. March 25, 2015 (n°13-23.368) FS-PB:
The Social Chamber recalls that an employee and an employer who have signed a termination agreement cannot validly conclude a settlement, firstly, unless it occurs after the approval of the termination agreement by the administrative authority, secondly, unless its purpose is to settle a dispute relating not to the termination of the employment contract but to its execution on elements not included in the termination agreement.
Transaction: tax regime
CE April 1, 2015 (n°365253):
In exchange for withdrawing proceedings before the labor court following a resignation, an employee received compensation as part of a settlement agreement with his employer. The tax authorities included this compensation in his taxable income, and the Court of Appeal rejected the employee's request for relief from the additional income tax assessment. The Council of State overturned the Court of Appeal's decision on the grounds that it should have examined whether the employee had established that the disputed settlement payment could be considered equivalent to compensation following a dismissal without just cause, in order to determine whether he was eligible for the income tax exemption provided for in Article 80 duodecies of the General Tax Code.
Calculation of the AGS guarantee: ceiling on claims
Soc. March 31, 2015 (n°13-21.184) FS-PB:
The maximum amount of the AGS guarantee is determined as of the date the employee's claim arose and no later than the date of the judgment approving the plan or ordering the judicial liquidation. When wage claims, due to different dates of arose, fall under different ceilings, these ceilings apply to each claim, up to the overall limit of the highest ceiling then in effect.
Wages due in the event of dismissal without just cause
Soc. March 31, 2015 (n°13-27.196) FS-PB:
In this case, an employee dismissed for serious misconduct was invited by the notification letter to refer the matter to the disciplinary board established by the collective bargaining agreement. The Court of Appeal ruled the dismissal to be without just cause. Accordingly, it penalized the employer for failing to comply with the collective bargaining agreement's procedure and ordered the employer to pay wages from the date of the dismissal notification until the date of the board's opinion. Since
no wages were owed by the employer for the period following the notification of a dismissal that results in the immediate termination of the contract, the Court of Cassation partially overturned the Court of Appeal's decision.
Dismissal – evidence
Soc. March 31, 2015 (n°13-24.410) FS-PB:
In a dispute between an employee dismissed for serious misconduct and his employer, the Court of Appeal rejected the employer's counterclaim seeking to compel the employee, under penalty of a fine, to destroy a copy of a hard drive. The Court of Appeal reasoned that the evidence presented by the employer did not demonstrate a risk of the documents being used for commercial purposes.
The Court of Cassation overturned this decision. According to the Court of Cassation, by ruling in this way, without determining whether the employee had established that the documents in question were strictly necessary for exercising his rights of defense in the dispute with his employer regarding his dismissal, the Court of Appeal deprived its decision of a legal basis.
Dismissal of a protected employee
CE 27 March 2015 (no. 371174):
In this case, a protected employee used 105 hours of allotted time for union activities to work for another company. The Administrative Court of Appeal based its decision on the fact that these actions were not carried out in the course of the employee's employment contract and ruled that the employee's dismissal could not be justified. According to the Council of State, an employee's actions outside the scope of their employment contract cannot be grounds for dismissal for misconduct, unless they demonstrate a breach of an obligation arising from that contract. A protected employee's use of their allotted time for union activities to engage in other professional activities violates the duty of loyalty to their employer, which stems from their employment contract. Consequently, the Council of State overturned the Court of Appeal's decision.
Fundamental freedoms of the employee
Soc. March 31, 2015 (n°13-25.436) FS-PB:
A skilled road worker employed by a highway concession company was dismissed for serious misconduct, specifically for being found intoxicated at his workplace. He sought to have his dismissal declared null and void. To this end, the employee argued that a fundamental freedom had been violated by the use of a breathalyzer test outside the workplace, in disregard of the procedures stipulated in the company's internal regulations. The Court, however, held that a breathalyzer test to determine an employee's intoxication at work did not constitute an infringement of a fundamental freedom, since, given the nature of the work assigned to the employee, such intoxication was likely to endanger people or property, and the procedures for such a test, as outlined in the internal regulations, allowed for its contestation, regardless of whether it was conducted, for technical reasons, outside the company premises.
1 Decree No. 2015-364 of 30 March 2015 relating to the fight against fraud in the posting of workers and the fight against illegal work
2 Law No. 2014-790 of 10 July 2014 aimed at combating unfair social competition
3 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the implementation of Directive 96/71/EC concerning the posting of workers 4 Order No. 2015-380 of 2 April 2015 relating to umbrella employment
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Newsletter No. 19 – Social Law
