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France: Redundancies which are carried out in the absence of economic reasons should be remedied by damages

27/06/2012

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France

France: Redundancies which are carried out in the absence of economic reasons should be remedied by damages and not by reversing the decision to dismiss.

International Employment Bulletin contents

 

Redundancies which are carried out in the absence of economic reasons should be remedied by damages and not by reversing the decision to dismiss.

I
n its decision of 3 May 2012, the French Supreme Court has put an end to the uncertainties surrounding the "Vivéo" proceedings.

In this case, a company named "Vivéo" had informed the works council that it wished to implement a redundancy plan for a considerable number of employees.

The accounting firm instructed by Vivéo's works council found, in substance, that there was nothing in the particular circumstances of the group or the French company that justified the restructuring and redundancy as envisaged and concluded that this procedure was solely financially motivated. The works council also felt that the plan to save jobs was deemed to be insufficient with respect to the group's means.

On this basis, the works council decided to sue Vivéo in order to reverse the decision to make employees redundant or, alternatively, to suspend the redundancy procedure. As its claims were dismissed by a first Court, it brought its case to the Paris Court of Appeal.

The Paris Court of Appeal granted the works council's claims and held that the redundancies were null due to the absence of economic reasons for the dismissals. Several other courts of appeal followed this decision. These courts of appeal based their decisions on the alleged "legislator's intention" in order to deviate from the letter of the law which only provides for damages and not for reversing the decision to dismiss and reinstating employees. 

Thus, on the basis of this case law all the employees would be hired back by Vivéo. Where rehiring was not possible, the employees would be awarded a minimum of all their salary and bonuses from the date of their alleged dismissal up until the date of the Court's decision that they be rehired, i.e., several years' salary.

The French Supreme Court overruled this decision and reiterated that the Labour Code does not permit reversing the decision to dismiss except where there is no plan to save jobs or the relevant plan is inadequate.

The lack of economic grounds is sanctioned by much lower damages. The decision given by the French Supreme Court is thus very clear "the dismissal procedure cannot be reversed on the basis of the economic reason for the dismissal".

In this decision, the French Supreme Court has once again limited the scope of proceedings concerning redundancy and related sanctions and confirmed the legislator's intentions: it is not up to the courts to involve themselves in the management of a company or judge its management decisions. Although the Court can impose sanctions and award damages to remedy the harm caused, its role is not to judge what occurred farther upstream.

By Laurent Guardelli and Bertrand Castex, Field Fisher Waterhouse LLP (Paris), Employment Group

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