This newsletter summarizes five significant judicial decisions over recent months:

• Economic grounds for redundancy: operating losses must be serious and lasting (Cass. soc., 18 October 2023, n°22-18.852 F-B)

After being made redundant, an employee contested the termination of her employment contract.

The Court of Appeal ruled that her redundancy was justified. Indeed, the redundancy letter referred to the group’s economic difficulties, resulting in losses over the past 3 years, despite rising turnover.

This reasoning was rejected by the French Supreme court, holding that the Court of Appeal should have examined whether the increase in operating losses – the economic indicator used here – was significant. In the Court’s view, the economic difficulties relied upon were not sufficient to demonstrate the serious and lasting nature of operating losses in the business sector in question. The French Supreme Court will from now on require that the economic indicator relied upon in a redundancy situation– other than a drop in orders or turnover – is (i) serious, i.e. that there is a real increase, exclusive of any accounting or financial manipulation, and (ii) lasting, i.e. that the economic difficulties are not temporary, and it is foreseeable that they will be long lasting. . In this case, the Court of Appeal would therefore have had to establish that these economic difficulties (losses) would continue beyond the three-year period.

• Proof: « mystery customer » evidence is admissible in dismissal proceedings (Cass. soc., 6 September 2023, n°22-13.783 F-B)

An employee of a self-service restaurant unknowingly served a “mystery customer”, who noticed a failure in the procedure for the receipt of payments. On this basis, the employer initiated disciplinary proceedings against the employee. The employee then challenged his dismissal before the labor court, claiming that the evidence provided by the mystery customer was inadmissible.

The Court of Appeal considered the dismissal justified, since proof had been provided that the employee had failed to comply with the company’s procedures for receipt of payments.

This reasoning convinced the French Supreme Court, which ruled that, since the employee had been informed in advance of the implementation of the “mystery customer” scheme within the company, which enabled the employer to assess employees and monitor their activity, the evidence was lawful and the dismissal valid.

• Redundancy: the scope of the redeployment obligation does not stop at companies in the same business sector (Cass. soc., 8 November 2023, n° 22-18.784) 

An employee made redundant challenged his termination before the employment tribunal.

As part of its obligation to look for alternative positions, his employer only searched for positions in companies within its group which operated in the same business sector.

The French Supreme Court considered however that in order to comply with its redeployment obligations an employer must consider all the companies within its group which activities, organization or place of operation would enable them to interchange all or part of their staff, regardless of whether or not they belong to the same business sector. The dismissal was therefore unfair.

• Invitation to a preliminary meeting: specific rule when the employee about to be dismissed is the sole staff representative (CE, 13 October 2023, n° 467113)

An employer asked the Labor inspector to authorize the dismissal of a protected employee, the company’s sole staff representative, but the inspector refused. The employer subsequently referred its request to the Minister of Labor, who also refused to grant the authorization. They considered that there was a procedural error because the invitation to the preliminary meeting, did not mention that the employee had the option to be assisted by an employee advisor.

The employer argued that this type of assistance is only provided for in companies without staff representatives, which was not the case here.

The Administrative Supreme Court confirmed this reasoning, stating that when the employee affected by the disciplinary procedure is the only staff representative in the company, this situation is comparable to that of a company with no staff representative. As a result the letter inviting the employee to the preliminary meeting must mention that the employee may be assisted by a person of his choice who is either a member of the company’s staff or is an employee advisor (an employee advisor is an individual external to the company whose name is on a specific list available notably at the City hall).

• Disciplinary procedure: failure to comply with a procedural rule may render dismissal unjustified (Cass. soc. 13 September 2023, n°21-25.830)

An employee dismissed for gross misconduct challenged her dismissal before the employment tribunal. She relied on the fact that the company rules and regulations provided that an employer which intends to impose a sanction must inform the employee in question of the complaints against them, in the letter inviting them to a preliminary meeting.  

The Court of Appeal dismissed the employee’s claims, holding that the letter referred to serious acts committed while carrying out her duties, which it found to be in compliance with the requirements of the company rules and regulations.  The details of the acts in question were explained in detail during the preliminary interview.

The French Supreme Court rejected this reasoning. It stated that any breach of the disciplinary procedure provided for by a collective bargaining agreement or by company rules and regulations is treated as a breach of the substantive protection of employees. This type of procedural breach would make a dismissal unfair if it deprived the employee of her right to prepare her defense, or when it is likely to have an influence on the employer’s final decision to dismiss. In this case, by failing to detail in the invitation letter the complaints against the employee, the employer deprived the employee of the opportunity to prepare her defense effectively. Her rights had been infringed. The dismissal was unfair.