French employment law update – May 2023
Jacques Perotto, Maxime Hermes, Anne-Sophie Houbart and Eloïse Ramos
Keep it in mind #3: check your subcontractors comply with social and tax obligations
Any company entering a contract amounting to at least €5,000 for an obligation to perform work, services or commercial activities must ensure that its contracting partner fulfils social security and tax filing obligations.
To do so, the contracting partner must in particular provide a certificate issued by social security bodies at the beginning of the contract and then at least every six months.
In the event of non-compliance with this duty of vigilance, and if the company’s subcontractor is reported for illegal employment, the principal may be held financially liable for the payment of taxes, social security contributions, salaries and other charges of its contracting partner.
Alerion’s advice: include clauses in your commercial contracts providing an obligation for your providers to transmit the requested documents on a regular basis and implement a verification process
Retirement reform: the bill got through
After a tense political and social sequence of events, most of the retirement reform has been validated by the Constitutional Court.
Among other measures, minimum age of retirement will be increased from 62 to 64.
Case law: loyalty obligation during sick leave
An employee participated in several badminton tournaments during his sick leave due to an elbow injury.
The employer dismissed him for violation of his loyalty obligation based on:
(i) the performance of such sport was likely to aggravate the employee’s injury or extend his sick leave.
(ii) the employee’s salary was paid during his sick leave.
Astonishingly, the Supreme Court ruled that the aggravation of the employee’s injury was not proved. Furthermore, the payment of the employer’s full salary, was not considered as a prejudice by the court. As a result, the employee’s dismissal was therefore not justified.
Warning: employees on sick leave can enjoy some leeway for their activities. Even if they are still bound by a loyalty obligation, performing an outside activity during sick leave does not necessarily qualify as misconduct.
French Supreme Court – 1st February 2023, n°21-20.526
Focus: unlawful surveillance of the employees
Surveillance of the employees is subject to strict legal requirements. The proof of an act is often dismissed because it was not obtained legally, as illustrated in three recent decisions:
– Declared purpose: a badge system was installed and declared to be used to control access to the premises. However, the employer used it to monitor employees’ activities.
The Court considered this evidence unlawful, insofar as the purpose of the badge system had been misused by the employer.
– Prior information of the employees: during consultation of CCTV recordings, an employer had found that an employee was embezzling money.
The Court dismissed the CCTV recordings because the employee had not been priorly informed of the purposes of the devices, nor the legal basis justifying their presence.
– Requirements on the diffusion of police reports: a bus driver had informed his employer that a block of tickets had disappeared. The employer transferred the CCTV recordings to the police, who found that the driver had been telephoning while driving and smoking in the bus. He was dismissed based on the content of the police report.
According to the Court, communicating the police report must be authorized by the Public Prosecutor in this specific case. The method of proof was therefore unlawful and could not be used to prove the driver’s misconduct.
Alerion’s advice: always have full visibility on compliance of your monitoring devices: purpose, adequation, works council and employee consultation, GDPR requirements…
From a preventive perspective, conduct a compliance audit; From a reactive perspective, consider gathering alternative evidence to demonstrate an employee’s misconduct.
French Supreme Court, 8th March 2023, n°21-20.798, n°21-17.802, n°20-21.848
Case law: obligations of the parent company in case of sale
A company transferring the capital it holds in a subsidiary has no obligation to ensure, before the sale, that the transferee has a recovery plan guaranteeing the economic and financial viability of the subsidiary.
Therefore, if the subsidiary is then put into compulsory liquidation, the parent company will not be liable for the damages suffered by former employees made redundant after the transfer of shares.
Interest: while the parent company may be held liable for the financial situation of their subsidiary, in some situations, this decision is a clear and reassuring limitation of such responsibility.
French Supreme Court – 1st March 2023, n°21-14.787
Do not hesitate to contact the Employment law team should you have any further questions.
Jacques Perotto, Partner, Maxime Hermes, Counsel, Anne-Sophie Houbart, Eloïse Ramos, Associates.