How to Establish a Business in France

In a recent video for Capstan TV, Judith Biron, employment lawyer at Capstan, explains how to establish a business in France.

Collective Redundancies in France Not Void for Lack of Economic Grounds

By Kaela Ji Eun KIM

A significant ruling of the French Supreme Court (Cass. soc , May 3, 2012, No. 11-20741) has reaffirmed that Works Councils cannot challenge collective redundancies for lack of economic grounds.

French law provides that, where a collective redundancy exercise involves ten or more employees, the employer must develop and implement a social plan. This must offer affected employees assistance in finding a new position and include a sufficient variety of services, such as training and outplacement. In cases where an employer's plan does not meet the legal requirements, the Works Council can bring proceedings to nullify it and effectively stop the redundancy procedure.

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Limitations on the Employee's Free Choice as Regards Where He Lives Must Be Justified and Proportionate

By Jean-Benoît Cottin

Since 1999, the French Supreme Court has ruled that, under the provisions of the European Convention on Human Rights and the French Labour Code, everyone has the right to "respect for his home". A free choice as regards the place of residence for self and family is one of the elements of that right. A restriction on that freedom by the employer is valid only on condition of it being essential to protect the legitimate interests of the company and proportionate to the aim pursued (Cass. soc. January 12, 1999, No. 96-40755).

For example, a business development manager living with his family in Paris should not be compelled to move his family residence to Montpellier, 750 km away where he was supposed to work (Cass. soc. January 12, 1999, No. 96-40755). A building janitor doesn't have to live in the building he works for, if he can execute his tasks properly while living elsewhere (Cass. Soc., November 12, 2008, No 07-42601). A contract clause stating that a lawyer must live where his firm is settled because of the necessary "integration into the local environment" isn't sufficiently justified (Cass. soc. July 12, 2005, No. 04-13342; Cass. soc., March 7, 2007, No. 05-21017).

In another more recent case, the Court ruled that dismissing a social worker, in charge of the physical and mental welfare of adults under guardianship, who lived 20km away (25 minutes) from their residence instead of the 200 meters maximum distance stipulated in the employment contract, is unlawful (Cass. soc., February 28, 2012, No. 10-18308).

Relapse of Occupational Accident Causes a Postponement of Paid Annual Leave

By Jean-Benoît Cottin

European law rules that a worker does not lose his right to paid annual leave which he has been unable to exercise because of sickness (ECJ, 20 January 2009, Case. And C-350/06 C-520/06 Schultz-Hoff and Her Majesty's Revenue and Customs). The French Supreme Court rules likewise. When an employee has been unable to take annual paid leave during the year he was supposed to, because of absences related to illness, accident or occupational illness, the paid annual leave must be postponed after he returns to work (Cass soc., Feb 3., 2010, No. 07-41446; Cass. soc., September 28, 2011, No. 09-70612).

The judgment of 16 February 2012 decides accordingly that the paid annual leave should be again postponed when the employee has been unable to take the leave because of a relapse.

Note: The European Court of Justice rules that such a postponement is not infinite: national rules may set a temporal limit on the accumulation of unused entitlements to paid annual leave acquired during a period of unfitness for work. However, the period set by that limit must be substantially longer than the reference period in respect of which it is granted. Therefore, the Court considers that a carry-over period of 15 months, as the case submitted to the Court, may reasonably be envisaged as it is not contrary to the purpose of the right to paid annual leave, in that it ensures that that right retains its positive effect for the worker as a rest period (ECJ, 22 November 2011, Case. C-214/10, KHS).

[Cass. soc., February 16, 2012, No. 10-21300, FS-P + B]

Dismissal for Repeated or Prolonged Absences for Sickness

By Jean-Benoît Cottin

The labor code prohibits employers from dismissing an employee because of his health or disability (C. trav., Art. L. 1132-1). Dismissal on grounds of health status is discriminatory and therefore null and void. However, these legal provisions do not prevent a dismissal based on the objective situation of the company whose business is disrupted by the prolonged absence or repeated absences of the sick employee. Such disturbance must occur at the company level, and not just at the department the employee works for (Cass soc. December 2, 2009, No. 08-43486), unless this department is essential for the business of the company (Cass soc. September 16, 2009, No. 08-41841).

The employee may only be dismissed if the employer has no choice but to replace him permanently by hiring another employee. Hiring a temporary worker is not a permanent replacement (Cass soc. May 21, 2008, No. 07-41511; Cass. soc. May 20, 2009, No. 08-40432), no more than using a service provider is (Cass. ass. Plen. April 22, 2011 , No. 09-43334). A judgment of January 25, 2012 of the Supreme Court (Cass. soc., January 25, 2012, No. 10-26502) states that the permanent replacement must take place in the company that employs the employee to be dismissed and not in another company of the group.

In this case, the recruitment of the employee had been commissioned and monitored by the supervisors of the employee to be replaced. The new employee did work for the same team as the previous employee, but had been legally hired by another company of the group. Therefore, the dismissal was invalid.

Harassing One's Superior Is a Felony

By Jean-Benoît Cottin

According to article L. 1152-1 of the French Labour Code, "Employees shall not be subjected to repeated actions constituting moral harassment, which intentionally or unintentionally result in the deterioration of their working conditions and are likely to violate their rights and dignity, impair their physical or mental health, or jeopardize their professional future". Article 222-33-2 of the French Labour Code sanctions, under similar circumstances, moral harassment, by a penalty of one year's imprisonment and a EUR 15.000 fine. The provisions concerned do not provide any details as to the perpetrator involved.

The Criminal Chamber of the French Supreme Court recently ruled (Cass. crim., December 6, 2011, n°10-82266) that the perpetrator may be convicted even if the individual concerned is actually the subordinate of the victim (so-called "ascending harassment"). In this case, the employee of a social service had been harassing his superior, denigrating his work and repeatedly disseminating contemptuous information about the victim, portraying him as being professionally incompetent. This went on for several years and, as a result, the victim committed suicide.

The Use of Geolocation Is Restricted

By Jean-Benoît Cottin

An employer who wishes to use a geolocation device must make a declaration to the CNIL (Commission nationale de l'informatique et des libertés), which is responsible for ensuring that information technology remains at the service of citizens and does not jeopardize human identity or breach human rights, privacy or individual or public liberties. The CNIL will also verify that the principles relating to the protection of personal data are respected.

The declaration may be made online. Only after the employer receives confirmation from CNIL that the declaration was received may the employer implement a system with geolocation devices.

A decision of the Supreme Court of 3 November 2011 points out that a system monitoring employee activity such as geolocation can not legally (CA Versailles, 17th ch., 17 September 2010, No. 09/02316, Messaoudi C / SA Sogeres) be used by the employer for any other purposes than those declared to the CNIL, and must be brought to the attention of the employees.

Moreover, geolocation limits the personal freedom of employees and this must be justified, in accordance with Article L. 1121-1 of the French Labour Code. According to the Supreme Court there is no such justification for controlling the hours of work of an employee who is free to organize his work. Furthermore, the employee in the case in question had not been informed that the device would be used for such purpose. The court ruled that this illegal use is sufficient to justify a notification by the employee of a breach of the employment contract by the employer (assimilated to unfair dismissal).

An Employer is Liable for Acts of Harassment Committed by Those Who Exercise De Facto or De Jure Authority Over Employees

By Jean-Benoît Cottin

The provisions of article L. 1152-1 of the French Labour Code defining and prohibiting bullying do not provide any details as to the perpetrator involved.

In a recent case it was decided that the employer has towards its employees a "safety obligation" and must, therefore, protect their health and safety in the workplace, particularly with regard to bullying. This obligation applies to the employer himself and to all employees. It also applies with respect to the actions of persons who exercise de facto or de jure authority over the employees. The fact that the employer himself commits no personal fault does not exempt him from liability. In this case, a fast food manager was the victim of bullying by a manager of a third company that the employer had a license agreement with (Cass soc. March 1, 2011, n ° 09-69616).

A decision of 19 October 2011 (Cass. soc., October 19, 2011, n°09-68272) rules likewise for a cleaning person hired by the property management company of a building who was bullied by the director of the homeowners' association. An earlier case ruled likewise and considered the employer as being liable for his wife's behaviour towards the employee who she harassed (Cass. soc., May 10 2001, n°99-40059).

Tags: Bullying

Compulsory Dividend Bonus

By Jean-Benoît Cottin

The law passed on July 28th, 2011 requires all French companies and groups of companies whose holding company is in France, to pay a bonus to employees if they distribute a dividend to their shareholders, which is higher than the average of the dividends of the  two previous years. The amount of the bonus is to be negotiated with the unions. If these negotiations are not successful, the employer can unilaterally decide the amount. For 2011, companies had until October 31st, 2011 to come into compliance. The bonus is exempt from social security contributions up to 1200 euros. According to preliminary surveys, the amount proposed by companies is mostly between 150 and 500 euros.

A Private Company May Fire an Employee for Wearing Islamic Head-Cover

By Jean-Benoît Cottin

On April 11th, the law prohibiting the wearing of any face covering in public spaces entered into force. Though not a special rule for Islamic veils, it obviously applies to such. This prohibition does not apply to workplaces since companies should be regarded as private places, except when freely open to the public (e.g. shops). However, French labour law does not oblige employers to take steps to accommodate an employee's religious beliefs. On the contrary, an employer may restrict the exercising of religious freedom at work on two grounds:

  • abuse of freedom of expression / thought, notably through insults, defamation, proselytism;
  • objective, relevant and justified criteria revolving around health and safety issues or around contacts with clients in some circumstances.

There is a consensus that the workplace should be regarded as a "neutral" place. Only 2% of discrimination claims (and not only work-related issues) to the former French Equal Opportunities and Anti-Discrimination Commission (Halde) were based on religion.

Therefore, case law on that matter is pretty limited (there is, for example, no Supreme Court ruling), but most cases have been resolved in favour of the employer. As a recent example, a veiled woman working in a crèche (nursery) who had been dismissed for gross misconduct when she refused to work without wearing her veil, saw her employer's decision upheld by the judge (Court of Appeal of Versailles, October 27th , 2011, # 10/05642).