Background

One of the key and challenging stages when embarking on a collective redundancy procedure in France is determining how to select employees for redundancy. The French labour code defines a list of five mandatory criteria to be taken into account when selecting employees such as family responsibilities, seniority, employability of the employee, disability and age. However there is no rule on the selection pool itself. Whether it be the company, the establishment or even the business unit being restructured, the Labour Code provides no answers. 

As a result, French case law has traditionally considered that the selection pool must be at company level, though by union agreement, companies can define the selection pool at another level, such as site, for example.

Effectively, this case law means that in the absence of a union agreement notwithstanding, a restructuring impacts only jobs within a single site, the employer had no choice but to pool all employees of same job category within the company, even if they work hundreds of kilometres away or within a business unit not impacted by the job cuts. Failing to carrying out the process appropriately would potentially entitle employees to receive uncapped damages for unfair dismissal in addition to their other rights, such as notice period, severance payment, outplacement and other measures under the company Social Plan.

An innovative Tribunal Decision providing more flexibility on the selection pool

As shown by the recent decision from the administrative tribunal of Cergy-Pontoise (TA Cergy-Pontoise, July 11, 2014), the 2013 reforms on collective redundancy caused two major changes in this case. Firstly, the Tribunal ruled that in principle the employer may unilaterally decide the selection pool for redundancy, subject to such decision being reasonable. Secondly, it ruled that in the absence of a reasonable selection pool, the redundancies may be null and void (i.e. employees effectively remain employed until the default is cured), though where the company is in bankruptcy only damages are paid out.

A close control by the Tribunal on the selection process

Though this decision is the first to our knowledge where a court has recognised the right for employer to choose their selection pool, disappointingly, the Administrative Tribunal found that the selection pool chosen by the employer was not objective, exercising close control on the Company’s business choices. By way of background, the collective redundancy impacted 2,882 employees of a French transport company. 85 agencies of the company were impacted and the company considered the employees in these impacted agencies would constitute the selection pool. However, as the Company employed as few as 9 employees per agency, the tribunal ruled that these pools led to indirectly selecting named employees. It found that “the significant number of dismissals and the necessity to a rapid recovery of the business were not sufficient to justify the chosen pools”.

Watch this space

The Labour Authority, which approved the Social Plan, and the company have appealed the Cergy-Pontoise judgement before the Appeal Court. A new ruling is expected within the coming months.It would certainly help employers (and indeed employees) if the Appeal court confirmed that employers are free to determine the appropriate selection pools for a redundancy, provided they are reasonable and properly thought through, as is the case under English law.