Jeantet's Employment Law Review (Aug 2016)

Date: Sep 2016

HE THAT WILL STEAL A PIN WILL BREAK A POUND IS NOT ALWAYS TRUE!

An employee is terminated for serious fault for stealing a colleague’s property. The problem was that it was just a damaged umbrella!

Is the employer allowed to ground the termination on serious fault in light of the low value of the item?

There was no question for the employer who claimed that tolerating theft in the company could impact negatively the confidence among employees and damage the good running of the business, whatever the value of the property that had been stolen.

Unsurprisingly, the court of appeals of Lyon expressed a different opinion in its ruling of February 4, 2015. The judges found that the disciplinary measure taken against the employee was excessive in light of the low value of the item, even though the existence of the employee’s fault was not seriously challengeable. In any event, the court held that the fault was not serious enough to prevent the employer from keeping the employee on its payroll.

The employer then filed recourse with the Supreme Court. He was dismissed of his claim by the Supreme Court’s decision of July 13, 2016.

The Supreme Court’s decision is self-explanatory:

the court of appeals, after examining the grievance stated in the dismissal letter, i.e. the theft of an umbrella that was the property of a co-worker, legitimately decided that this grievance, considering the circumstances (the umbrella was damaged and left unattended on the floor), was not a serious fault and could therefore not validate a termination based on a real and serious cause”.

The main interest of this ruling is to recall that labor courts and courts of appeals have a complete freedom of judgment when assessing the seriousness of the facts of the cases brought to them. That is why if the theft of an item can result in the employee’s dismissal for serious fault, this is not systematic in particular in the event of an item with no significant value.

This is reflected in article L.1235-1 of the labor code providing that “the judge, who is responsible for determining the seriousness of the employer’s motives, makes its decision in light of the information and documentation disclosed by the parties […]”

Employers should therefore be cautious when using disciplinary measures against employees.

There is no reason to terminate an employee because he stole a damage umbrella. Things would be different if the employer could prove that the employee repeatedly stole co-workers’ belongings in the past.

REMAKE OF « VERY BAD TRIP » BEFORE THE SUPREME COURT!

The sales manager in charge of selling Armagnac was completely drunk after a diner with clients (!). She nevertheless decided to take her company’s car to go back home. Unsurprisingly, she got an accident and completely destroyed the car. She then decided to call her boss’ grand-parents in the middle of the night but was unable to have a coherent discussion with them.

She was terminated for gross fault.

The employee decided to go to court and to challenge the termination of her employment contract. She put forward that she had contributed during 7 years to the commercial performance of the company. She claimed that her termination for gross fault was disproportionate considering the quality of her work in the company. She then asked the labor court to change her termination for gross fault into a termination for real and serious cause, which could give her an opportunity to get her severance indemnity, her prior notice indemnity and her paid vacation indemnity. She also claimed that her termination for gross fault was a retaliation on the part of her employer considering their love affair in the past. She then asked for damages due to the vexatious circumstances of her termination.

She was dismissed of all her claims by the court of appeals. The court found that her termination for gross fault was grounded. There was therefore no reason to rule that her termination would have taken place under vexatious circumstances.

The court of appeals’ decision was overturned by the Supreme Court’s ruling of June 22, 2016.

The fact that the employee’s termination was based on a real and serious cause did not necessarily mean that the termination was exempted from vexatious circumstances, the Supreme Court said.

The Supreme Court’s opinion cannot seriously be criticized as the two claims (damages for abusive termination and damages for vexatious circumstances) are not supported by the same legal grounds.

The damages awarded due an employee who was terminated under vexatious circumstances aim at compensating a non-material damage whereas the damages allocated to an employee for abusive termination are used to compensate the unfair loss of his job.

That is why the employee terminated under vexatious circumstances can get damages even though his termination is grounded.

WHAT IS EXACTLY AN EXECUTIVE OFFICER?

Companies like hiring executive officers because those individuals are not subject to the French working time regulation. However, many companies’ payroll looks like the Mexican army where subordinates are colonels!

Article L.3111-2 of the labor code defines executive officers as individuals who are granted responsibilities with a high level of independence in organizing their working time, who enjoy a great autonomy in their decision making-process and who get the highest remunerations in the company.

Considering the abusive use of the concept of “executive officers” in the past, the Supreme Court decided to give some guidelines to companies in its ruling of January 31, 2012. The cumulative criteria set down in article L.3111-2 means that this category should only include officers who are part of the management of the company, the Supreme Court said.

Does it mean that the Supreme Court decided to add a fourth criterion to the three legal ones, i.e. participating to the company’s management?

Several courts of appeals responded positively to this question, including the court of appeals of Paris, which found that an individual could not be qualified as an executive officer if the employer was unable to prove that this individual was part of the management of the company.

The court of appeals’ decision was quashed as follows by the Supreme Court’s ruling of June 22, 2016:

only individuals who are part of the company’s management can be qualified as executive officers. It does not mean however that participating to the company’s management is an autonomous and distinct criterion that should replace the three legal criteria

Employers should therefore reserve the status of executive officer to employees having management prerogatives at the company level based on their remuneration (among the highest in the company), their autonomy in the decision making-process and their independency when organizing their working time.

By using this method, a creative director in a fashion house will not qualify as an executive officer if s/he does not contribute to the company’s management, even though s/he meets the three legal criteria.

A BINDING OFFER TO WORK UNDER A FIXED-TERM CONTRACT IS NOT SUBJECT TO FORMALITY REQUIREMENTS 

Good news! The excessive formalism of fixed-term employment contracts is not applicable to a binding offer made to an employee working under a fixed-term contract. This is what the Supreme Court said in its ruling of July 6, 2016.

An employee entered into an offer to work under a fixed-term employment contract. Later on, the fixed-term contract was changed into an indefinite term contract. When the employee was terminated due to the economic difficulties facing the company, she asked the labor court to rule that her initial fixed-term contract was a de facto indefinite term contract. She supported her claim by stating that her employer’s offer to work under a fixed-term contract remained silent as to the professional qualification of the employee that she was replacing.

This statement is compulsory in a fixed-term contract and employer’s failure to put it down in the contract may result in the requalification of the contract into an indefinite-term contract as per the provisions of article L.1242-12 of the labor code.

According to the court of appeals that heard the case, the requalification was necessary given that the formalism applicable to fixed-term employment contracts should be extended to employers’ binding offers.

A binding offer is treated under the labor code as an employment contract, meaning that its abusive termination by the employer should result in the payment of damages to the employee. Based on this, the court of appeals’ opinion seemed consistent from a legal stand point. However, the Supreme Court ruled differently.

The Supreme Court found that “the provisions of article L1242-12 of the labor code cannot be enforced against binding offers”.

Accordingly, a binding offer does not need to comply with all the formality requirements of the fixed-term employment contracts as missing information in the offer can be cured when drafting the fixed-term contract.

The Supreme Court’s ruling means that if an offer has the same binding effects as a fixed-term contract, it is not submitted to formalism. Binding offer are therefore exempted from applying the drafting requirements that are used in case of a fixed-term contract.

FRAUD CORRUPTS ALL. ARE YOU SURE?

Fraud corrupts all”. This principle is one of lawyers’ favorites.

However, the use of this principle is not universal. That is what can be inferred from the decision rendered by the Supreme Court on June 22, 2016.

In the case referred to the Supreme Court, an employer had entered into termination agreements with two employees while terminating others for economic reasons. The central works council decided to bring a lawsuit against the company as a result of the company’s breach of its obligation to inform and consult the employees’ representatives in case of collective terminations.

The employer was convicted by the first instance civil court. One of the two employees having signed a termination agreement decided to take advantage of the employer’s conviction to file a claim with the labor court and to ask for the cancellation of his agreement.

Unfortunately for him, his legal action was time-barred. The employee then decided to use the principle “fraud corrupts all” in support of his claim. According to him, the employer’s breach of the labor code provisions on collective terminations made his termination agreement void.

The employee had some reasons to be self-confident considering the Supreme Court’s ruling of March 9, 2011 stating that termination agreements should be taken into account when determining the relevant information-consultation procedure applicable to employees’ representatives and employers’ obligation in case of a reduction in force.

However, the employee was disappointed in his hopes after the Supreme Court dismissed his claim and brought to main principles:

Principle n°1: statute of limitations applicable to termination agreements can be set aside due to the employer’s fraud only if the employer used fraudulent means to prevent the employee from acting in the prescribed timeframe. It was not so in the case referred to the Supreme Court.

Principle n°2; the one-year statute of limitations should start at the time the fraud is revealed, not at the time the termination agreement is approved by the labor administration. In the case at hand, the first instance civil court’s decision convicting the employer for breach of the provisions of the labor code dealing with collective terminations for economic reasons had been rendered more than one year ago. There was no valid ground for the employee to get the cancellation of his termination agreement.

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