Facts
An employee was hired by the Vinci company before being assigned to a Moroccan subsidiary. Following his dismissal for economic reasons by this subsidiary, he was not reinstated by the parent company. The employee challenged the termination of his contract and claimed damages for dismissal without real and serious cause, as well as severance pay. To calculate the amount, the employee asked that the last salary received in Morocco be taken into account. However, the company applied the salary stipulated in the expatriation contract, which expressly provided that in the event of termination of the contract, the compensation due would be calculated on the basis of the reference salary in France alone.
The decision of the Court of Appeal
Confirming the judgment handed down by the court of first instance, the appeal judges rejected the employee’s claims, noting that, in the absence of any legal provision concerning the calculation of termination indemnities in this context, the parties may agree to settle this issue. In this respect, the judges noted that the contract complied with article 6.2.6 of the collective bargaining agreement for public works executives, which stipulates that in the event of termination of the employment contract during a stay abroad, “the indemnities likely to be due to the executive on this occasion are calculated, except in a more favorable case provided for in the expat contract, on the amount of the executive’s effective remuneration based in mainland France”. Consequently, the amount of damages due to the employee could be calculated on the basis of the salary received in France.
The position of the French Supreme Court
The Social Division of the French Supreme Court (Chambre sociale) censured the appeals decision, citing Article L. 1231-5 of the French Labor Code and reiterating the reasons given in previous decisions.
“Whereas, according to this text, when an employee hired by a parent company has been placed at the disposal of a foreign subsidiary and an employment contract has been signed with the latter, the parent company ensures his repatriation in the event of dismissal by the subsidiary and provides him with a new job compatible with the importance of his previous duties within the subsidiary ; that it follows that when the parent company does not reinstate the employee after his dismissal by the foreign subsidiary, the severance pay to which the employee is entitled must be calculated by reference to the wages received by the employee in his last job”.
The novelty of this ruling, it seems to me, lies in the fact that the Cour de cassation considers that this basis of calculation also applies to conventional redundancy pay.
“In so ruling, the Court of Appeal violated the aforementioned text, notwithstanding any contractual stipulations or provisions of the applicable collective bargaining agreement that were less favorable than the legal rule, whereas the indemnity in lieu of notice, the contractual redundancy indemnity, the wages due in respect of the reclassification leave allowance and the damages for dismissal without real and serious cause were to be calculated on the basis of the expatriation wage in Morocco.”
In the past, the Cour de cassation has already taken a similar stance when the dismissed employee was absent due to illness prior to his dismissal: in 2017, it thus considered that, in this hypothesis, the reference salary to be taken into consideration for the calculation of the legal or conventional dismissal indemnity is, depending on the formula most advantageous to the employee, that of the last twelve or three months prior to the termination (Soc., May 23, 2017, 15-22.223).
In our view, this solution is open to criticism: in accordance with the principle of favorability, the amount of the legal indemnity calculated on the basis defined by the Cour de cassation should be compared with the amount of the conventional indemnity calculated on the basis defined in the collective agreement.
In any event, these decisions should be taken into account.