Economic Dismissal: What is the impact of traditional dismissal on applicable procedures?

Financial dismissal: The procedure depends on the number of employees covered by the project

Dismissals for financial reasons are pronounced for reasons unrelated to the employee. It is based on economic causes. And it leads to loss of employment or change. Or by a proposal to change his employment contract rejected by your employee.

The steps you follow depend on the number of employees you plan to dismiss. Therefore, there is a distinction between individual dismissals (related to one employee) and collective dismissals (related to multiple employees).

However, there are some collective dismissal procedures applicable, depending on:

  • Number of employees scheduled to be dismissed (less than 10 or at least 10 in the same 30 days).
  • And your company’s workforce (less or at least 50 employees).

The difference in procedure is mainly related to the consultation of the Socio-Economic Commission (CSE). The number of meetings, the information conveyed, the subject of the discussion. In addition, the role of DREETS (ex-DIRECCTE) is slightly enhanced on a case-by-case basis, such as communicating information, verifying compliance with procedures, and validating or approving the Job Protection Plan (PSE) when required.

This is the case for a company with at least 50 employees if at least 10 employees are intentionally dismissed in the same 30 days. Without the PSE, the dismissal procedure will be invalid.

But how do you evaluate the thresholds for these 10 employees and determine the steps to follow? Do I only need to consider the number of expected dismissals? Or are there other modes of termination of the employment contract? Court of Cassation has just reiterated its position on traditional violations in recently filed cases.

Economic Dismissal: Impact of Traditional Dismissal on Applicable Procedures

In this case, the employee was hired by a company that belonged to the group. This group was sold to another company nine years later. After that, the activities of the sold company were transferred to another city.

The employee’s new employer offered him to change his contract. Especially the geographical movement was included. He refused this change and was fired for financial reasons.

But he thought the dismissal was invalid. His new employer did not apply the procedures in place if at least 10 employees were intentionally dismissed in 30 days. In particular, rules related to information and consultation of elected representatives, and rules related to PSE.

In this case, more than 10 contract terminations have been signed with other employees. They were included in the reorganization project for financial reasons submitted to staff representatives. The presentation of its social impact reported a 12.24 headcount reduction compensated for by the traditional rupture of 10.37.

Therefore, employees thought they had financial reasons and were part of one of their modality, the headcount reduction process. Therefore, in his view, they need to be taken into account when determining applicable procedures.

Court of Cassation agreed with him. Many traditional dismissals have been made in the context of headcount reductions due to financial difficulties. Therefore, they were of economic nature. And they were part of a global, collaborative plan to reduce the workforce within the company. One of them was one of the modality.
Therefore, they had to be taken into account in order to determine the appropriate steps for notifying and consulting employee representatives. Similar to the employer’s obligations regarding employment protection plans.

In this context, it didn’t matter if the employee involved was a journalist. And that they would benefit from a transfer clause that would allow them to terminate their contract with their own initiative.

For more information on redundancy procedures for financial reasons, we recommend the Tissot Social Enterprise ACTIV document. This document contains several Lumio interactive steps that this process supports. As with the model of letters and required documents. To get an overview, we recommend downloading the free preliminary interview invitation template.

Destruction Institute, Social Council, January 19, 2022, n ° 20-11.962 (Termination of contract if for financial reasons and part of a modality or a labor reduction process that constitutes one of the modality Procedures for notifying and consulting relevant staff representatives and determining employer obligations regarding employment protection plans) need to be taken into account)