Companies of at least 50 employees who make 10 or more employees redundant on economic grounds within a period of 30 days are required to implement a social plan known as a "plan de sauvegarde de l'emploi."

This plan includes all the measures to be applied in order to limit the number of redundancies and promote redeployment of those employees whose redundancy cannot be avoided. Employee representatives must be informed and consulted on the plan, which must then be sent to the Labour Inspectorate.

It is therefore important to determine whether a company has an obligation to implement such a plan, particularly as not doing so where necessary will result in the redundancies being considered null and void. Facts

An Italian bank took the decision to close its French branch and therefore make all 28 of its employees redundant. As the bank's presence in France was less than 50 employees, the management did not implement a social plan.

The Court of Appeal held that the 28 redundancies were null and void as no social plan had been implemented as it held was required, on the basis that the headcount of the entire company should be taken into consideration, irrespective of the location of the employees. A branch is not a separate legal entity, and, on the basis of the Court of Appeal's decision, should be considered as merely a part of the global company, which employed considerably more than 50 employees.

The Cour de Cassation refused this analysis of the law however, and held that given the limit of the application of French law to the French territory, only those employees directly attached to the employer in France are subject to French employment law, such that the workforce to be taken into account should only include those employees in France.

Effect on employers

This case limits the application of French collective redundancy rules to situations where the French entity itself fulfils the criteria, and therefore releases a considerable number of foreign companies from requirements which are procedurally complex, particularly for entities managed abroad.

Cass. Soc., 23 September 2008, n° 07-42.862 F-P