Dismissal for economic reasons: latest news

Dismissal for economic reasons: latest news

By two judgments dated the same day, April 5, 2023, the Social Chamber of the Court of Cassation has provided important clarifications on the procedure of dismissal for economic reasons.

Consultation of staff representatives is not required in the event of dismissal for individual economic reasons

An employer who "plans" to carry out a "small" collective redundancy for economic reasons (2 to 9 employees over a period of 30 days) must meet and consult his CSE, i.e. the social and economic committee (art. L.1233-8 C.trav.).

In this first case, the employer had planned to proceed with the abolition of three positions but, since two of the three employees had been able to be reclassified internally, only one of them was still affected by a dismissal measure. This employee had nevertheless maintained that the company should have consulted the staff representatives (which it had not done), since initially, it had indeed considered three job cuts, and therefore three dismissals. The reasoning was logical, since the text refers to dismissals only envisaged; moreover, the employee had been followed by the Court of Appeal. However, this decision was censured by the Court of Cassation, which ruled on the contrary that, since two of the three employees had accepted their internal reclassification, the dismissal had only been envisaged with regard to one of them and , therefore, the staff representatives did not have to be consulted in this case.

This decision, which has the effect of alleviating the obligations resting on the employers, does not however convince legally, since the reclassification proposals are part of the dismissal procedure for economic reasons and must in principle follow the consultation of the CSE. Moreover, the procedure applicable in this matter depends on the company's workforce and the number of dismissals envisaged, which must be assessed at the time the procedure is initiated, regardless of the number of dismissals that will actually take place ( Cass. Soc. October 12, 2004, No. 02-40.685). This decision is therefore surprising, especially since it is published in the Bulletin of the judgments of the Court of Cassation, which thus recognizes in it a doctrinal scope.

In any case, companies must remain cautious. Indeed, even when they are only considering dismissal for individual economic reasons, they may be required to consult their CSE.

On the one hand, such a measure may be part of a reorganization and/or have consequences for the organization, impacting several employees. In this case, in companies with at least 50 employees, the CSE should be consulted under its general powers in economic matters, in the event of a restructuring and downsizing project or, more broadly, if the question is of interest to the organization, management or general operation of the company, in particular the volume of staff or working conditions (art. L.2312-8 and L.2312-39 C.trav.).

On the other hand, even in the event of dismissal for individual economic reasons, the employer may have to take into account, for the choice of the employee concerned, order criteria which are defined after consultation with the CSE (art. L.1233 -5, L.1233-7 C.trav.; Cass. Soc. June 21, 1994, No. 93-40.670). It is not excluded that this judgment of 2023 participates in calling into question this old jurisprudential position, the basis of which is also debatable.

 

In case of acceptance of a CSP, the reason for termination can be specified within 15 days

Except in very large companies, the employer who plans to carry out one or more redundancies for economic reasons must offer his employees a support system called a professional security contract (CSP). If the employee joins the CSP, the employment contract is automatically terminated after a cooling-off period of 21 days. The employer must inform the employee of the economic reasons for the break then envisaged as well as their impact on employment, at the time of the delivery of the documentation, or in the letter of dismissal possibly notified as a precaution, and in any case , at the latest, at the time of acceptance of the device.

Otherwise, since 2018, the employer can specify the "reasons stated in the letter of dismissal" after notification thereof, spontaneously or at the request of the employee, within a period of 15 days (art. L.1235-2, R.1233-2-2 C.trav.).

Even if the CSP proposal is part of a dismissal procedure for economic reasons, and that this device is provided for in the part of the Labor Code relating to dismissal for economic reasons, the termination of the employment contract occurs, in this case, not by notification of a letter of dismissal, but because of the employee's membership of the CSP (art. L.1233-67 C.trav.). Moreover, the system differs on a few points since, in the event of membership of the CSP, and contrary to dismissal, the employee does not benefit from any (compensatory) indemnity for notice and the administration does not have to be informed of the termination (excluding PSE and layoffs notified as a precaution) (art. L.1233-19, L.1233-67, D.1233-3 C.trav.). It was therefore not self-evident that the employer could specify the reasons for the termination within 15 days, as it is expressly authorized in the event of dismissal.

This is however the position adopted by the Court of Cassation in its second judgment of April 5, 2023. In this case, the employees had been given the CSP form during their preliminary interview on September 21, 2018 and had signed up for it on the following September 27, with effect from October 12. Meanwhile, on October 9, the employer had specified the reasons for the break in a written document (letter of dismissal as a precaution). The High Court considers that the company had been able to validly specify the reasons within 15 days of joining the CSP.

Companies must remain vigilant because, if the employer can specify a posteriori the reasons for the rupture envisaged, he cannot on the other hand add new reasons. It is therefore imperative that an information document be given to the employee as soon as the CSP form is submitted, since the employee can join this system the same day.