Works Councils in France have the right under the Labour Code (Article L.2325-35) to appoint a chartered accountant to assist them with activities such as the annual review of accounts, advice on the strategic direction of the employer company and collective redundancies. Companies are obliged to pay for the accountants in those circumstances. If a Works Council appoints an accountant for matters outside Article L.2325-35, it must bear the costs itself.
The fees incurred by chartered accountants instructed by Works Councils can sometimes be very high, but the French courts have traditionally been reluctant to interfere, partly because of the risk of being seen to undermine the quality of the advice provided to the Works Council by limiting the cost of it. Similarly, French employers have fought shy of challenging the bills because it will bring them into direct conflict with the Works Council in question. This month, however, the French Court of Appeal upheld an employer’s challenge to the level of fees incurred by accountants advising its Works Council.
Progexa, a firm of accountants, was instructed by the Works Council at Pilpa to examine whether there was a right to raise an alarm (“droit d’alerte”), to undertake a review of accounts and to review a collective redundancy plan. In total Progexa’s bill came to €155,739 (of which approximately €17,000 was for “professional expenses”). Pilpa challenged the level of fees billed by Progexa and was successful before the Tribunal de Grande Instance in Paris. Progexa reimbursed €46,000 to Pilpa. At the same time it lodged an appeal, but the Court of Appeal in Paris has this month upheld the Tribunal’s decision. It also went on to order Progexa to pay part of the costs of the appeal.
This is a rare result and reflects the finding that the bill presented by Progexa was some 30% overstated. It shows that employers can and should challenge the fees incurred by accountants in advising their Works Councils where the amount billed is felt to be disproportionate to the services rendered. Our advice is however that such challenges are best limited to very material over-billing. Otherwise employers face the risk that the costs of the challenge exceed the amount recovered and that they do a degree of damage to employment relations in the workplace which is disproportionate to any actual saving of cash.