In a recent case (Cass Soc 26/10/2010, n° 09-42.740) the Cour de Cassation held that a company can apply only disciplinary measures that are expressly provided for in its internal regulations. Furthermore, employees may be suspended only if the maximum duration of such a suspension is provided for in the internal regulations.

In the case at hand, the employer disciplined the employee by ordering a five-day suspension. The possibility of suspending an employee on disciplinary grounds was provided for by the internal regulations, but no duration was indicated. The court held that the disciplinary suspension should be cancelled and that the employee should be paid the salary due for the five day period of the suspension.

Companies with at least 20 employees can no longer discipline their staff without precise and specific internal regulations providing for this possibility. As a result, companies should review their internal regulations to ensure that the scope of disciplinary measures is laid down and that these measures are sufficiently precise, particularly in terms of the duration of any suspension. In addition, disciplinary provisions must comply with the terms provided for by collective bargaining agreements, and should be updated where appropriate.

Authority to dismiss in Simplified joint stock companies

In two cases dated 19 November 2010 (Cass ch Mixte, 19/11/2010 N°10-10.095 and N° 10-30.215), the Cour de Cassation resolved a legal controversy challenging terminations in Simplified joint stock companies ("SAS") due to the claimed lack of authority of the persons signing the termination letters.

Lower courts had held that as only those officers recorded with the Companies Registry had authority to represent the company towards third parties, the authority to sign termination letters should be limited to these same rules.

However, in the two recent cases, the Cour de Cassation held that this rule is not exclusive and does not prevent these individuals from delegating their powers to carry out specific actions such as hiring or dismissing employees.

It established that the formalities required for general representative powers were not applicable to functional delegations of authority, and therefore such delegations of authority do not need to be referred to in the bylaws, or published at the Companies Registry.

Furthermore, the Cour de Cassation also held that a delegation of authority to dismiss employees need not be in writing and can simply result from the employee's apparent authority arising from their position within the company. Therefore, a human resources manager or director has sufficient authority as a result of his or her position and independent from any written delegation of powers, to lead and sign off on a dismissal process. This decision has since been reinforced by the Cour de Cassation in two further cases (Cass. Soc. 15/12/2010, n° 09-42.642 and Cass. Soc. 26/01/2011, n° 08-43.475).

Even where no apparent authority exists due to an employee holding a position that does not imply such powers, the Cour de Cassation held that a dismissal is valid as long as the company has expressed a clear and unequivocal intention to ratify the dismissal process.

In one of the two cases, the Supreme Court held that even though the termination procedure was carried out by a regional manager and sales manager, the company had ratified the decision by the company's legal representative's actions in relation to the court case.

A termination through mutual agreement cannot have the effect of settling claims

In a case dated 15 December 2010 (Cass. Soc. 15 December 2010, n°09-40.701), the Cour de Cassation held that the termination of an employment relationship through mutual agreement has the sole effect of ending the relationship between the parties, and cannot constitute a settlement agreement intended to waive and avoid any current or future disputes relating to the termination of the employment contract through reciprocal concessions.

Irrespective of the terms agreed between the parties, the agreement cannot have the effect of denying the employee rights resulting from the performance of the employment contract.

Law applicable to termination of an employee seconded within an EU Member State

In a case dated 18 January 2011 (Cass. Soc. 18/01/2011, n° 09-43.190), the Cour de Cassation held that while article 3 of Directive 96/71/EC of 16 December 1996 "concerning the posting of workers in the framework of the provision of services" (Posted Workers Directive) defines the working conditions and employment terms applicable to the posted workers, this does not exclude the application of the law as defined by the Rome Convention in relation to the termination of the employment contract, as such provisions are not part of the mandatory rules offering minimum protection in the country of posting.

Article 6 (2) of the Rome Convention (which was in force at the time of the facts – and has now been replaced by the Rome I Regulation 593/2008 providing for very similar terms) provides that "Notwithstanding the provisions of Article 4, a contract of employment shall, in the absence of choice in accordance with Article 3, be governed:

  1. by the law of the country in which the employee habitually carries out his work in performance of the contract, even if he is temporarily employed in another country ; or
  2. if the employee does not habitually carry out his work in any one country, by the law of the country in which the place of business through which he was engaged is situated.

In the case at hand, the employee of a UK company was temporarily seconded to a company in France. The Cour de Cassation held that the place of temporary secondment did not constitute his habitual place of work which remained in the UK. As a result, the termination of his employment was governed by the laws of the UK, not France.