France: French Labour Law Newsletter

Last Updated: 27 November 2007
Article by Frederic Navarro, Olivier Laude and Claire Machureau

Current Legislation And Regulations

Withdrawal of Contribution Delalande as of January 1, 2008

Save the special cases set forth in article L. 321-13 of the Labor Code, any breach of the employment contract of an employee aged 50 and over, entitling them to indemnification under the unemployment insurance, binds the employer to pay a contribution to the Assedic, known as "Contribution Delalande". This contribution amounts to between 1 and 12 months’ gross salary, depending on the age of the employee concerned and the size of the company.

In order to encourage the recruitment of seniors, article 50 of Act n° 2006-1770 dated December 30, 2006 regarding development of participation and employee share ownership and including several economic and labor provisions, abrogated the Contribution Delalande under the following conditions:

  • the contribution shall not be payable pursuant to a breach of the employment contract of an employee whose hiring occurred after the date of publication of the December 30, 2006 Act, i.e. after December 31, 2006;
  • the contribution shall be definitively withdrawn as of January 1, 2008.

Precision: In circular n° 2007-05 dated February 14, 2007, the Unedic specified that, in accordance with the position taken by the Directorate-General of Labor, the date used as a basis for determining whether the Contribution Delalande should be called for shall be the one corresponding to the effective date of breach of the contract and not that of the notification thereof.

Therefore, for example, the contract of an employee aged 50 or over whose dismissal would be notified on December 15, 2007 subject to a two months’ notice period, would terminate on February 15, 2008 and would thus not enable to call for Contribution Delalande.

Jurisprudence

The obligation to ensure legal protection of an employee prosecuted for events related to the performance of its duties

An employee holding office as a salaried agent on behalf of an insurance company was the subject of a claim for falsification of accounts filed by a client whose losses the company had refused to assume. The employee was put under custody but benefited from a non-suit. As the employer refused to assist him and to assume the fees necessary to his defense within the framework of these criminal proceedings, the employee initiated proceedings with the Labor Court, aiming at having the employer sentenced to pay damages including repayment of the said fees.

At first instance, the Labor Court acceded to this request.

Upon consideration of the appeal lodged, the Paris Court of Appeal reversed this judgment, invoking, on the one hand, that the penal liability was a personal liability and, on the other hand, that there was no legal or contractual obligation that could bind the employer to provide assistance to its employee in the event of criminal proceedings initiated against it for events which occurred within the framework of its duties.

In a broadly circulated decision, the Court of cassation censures the latter judgment in the visa of article 1135 of the Civil Code ("the contracts bind not only to what is set forth therein, but also to all that could arise from the obligation pursuant to its nature as a matter of equity, right of usage or law") and states "that vested by law of the power of management and control of the employees placed under its legal subordination, the employer is bound to guarantee the latter with respect to all actions or facts entered into or carried out pursuant to the performance of the employment contract." (Soc. 18 October 2006, n° 04-48.612).

The judicial termination proceedings following the dismissal are inapplicable

Dismissed for serious misconduct on July 10, 2002, an advertisement manager initiated proceedings with the Labor Court on September 12, 2002, to argue the merit of his dismissal and to have recognized the breach of his employment contract since May 12, 2002 by his employer, blamed, in particular, for unilaterally modifying the employment contract.

In a broadly circulated decision, the Court of cassation, reminding the saying "rupture sur rupture ne vaut" ("a contract which has already been breached may not be breached again"), considered that "as the employment contract was breached upon sending of the registered letter with return receipt requested notifying the dismissal, the employee’s subsequent claim, aiming at recognition of the said contract’s judicial termination, is necessarily inapplicable" (Soc. 20 December 2006, n° 05-42.539).

Therefore, the judge doesn’t need to adjudicate the claim for judicial termination as it is unfounded. However, the Court of cassation states that the judge must, "in order to assess the merit of the dismissal, take into consideration the grievances invoked by the employee to account for its termination claim as long as they are likely to have an impact on such assessment".

Precision: The same reasoning can be applied when an employee has initiated proceedings for judicial termination of its employment contract before acknowledgment of the breach arising from the events held against its employer. Indeed, as acknowledgment of the breach entails immediate termination of the contract, the judge has no reason to adjudicate the claim for judicial termination. However, its decision must be based on the employer’s breaches invoked by the employee in support of its claim for judicial termination which became inapplicable on the one hand, and of the acknowledgment on the other hand (Soc. 31 October 2006, 3 cases, n° 04-48.234, n° 05-42.158 and n° 04-46.280).

May employees having adhered to the PRA still contest their dismissal?

The Personalized Reclassification Agreement (PRA), initiated by the law on social cohesion dated January 18, 2005, superseded, as from June 1, 2005, the "Pare anticipé" plan. It allows the employee to benefit, under certain conditions and following the breach of its employment contract for economic grounds, from a special reclassification allocation and from certain measures in favour of its accelerated reclassification for an eight-month period.

In case of adhesion of the employee to the PRA plan, "the employment contract is deemed terminated on a joint agreement by the parties" as set forth in article L. 321-4-2, paragraph 4 of the Labor Code.

According to doctrine, nothing should prevent the employee having adhered to the PRA from contesting the grounds for its dismissal.

However, in a judgment dated October 17, 2006, which became decisive failing appeal, the Labor Court of Limoges judged that an employee having entered into a PRA "may not invoke the improper nature of its dismissal, as adhesion to the PRA entails termination of the employment contract on a joint agreement by the parties".

In a decision of the Court of Appeal dated February 23, 2007, the Court of Appeal of Douai took an analogous position. One should wait and see what the position of the Court of cassation will be. Yet, it is most likely that the latter does not agree with this analysis and keeps the same position as the one it had taken with respect to the conversion agreements. Therefore, the employees would be able to challenge the economic grounds for their dismissal, the points of order, as well as the non-compliance with the reemployment priority and the reclassification obligation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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