Mutually agreed terminations executed shortly before a social plan is launched: the French Supreme Court insists on the importance of informing the employee
7 mai 2021
The French Labour Code clearly states that the terms of a mutually agreed termination must be such as to guarantee the parties’ free consent (article L. 1237-11 of the French Labour Code).
The parties’ consent must therefore not be flawed: a mutually agreed termination is not valid and may be challenged before the labour courts if the employee has not freely consented.
NB. The parties benefit from a 12-month period (as from the Labour administration’s endorsement) for challenging a mutually agreed termination.
Under French law, consent is considered as flawed where it results from :
- Misrepresentation: the employer deceives the employee in order to secure their consent (article 1137 of the French Civil Code). This includes not disclosing certain information, providing false information, etc.
- Physical or moral duress: the employer exerts physical and/or moral pressure (harassment) on the employee in order to get them to sign the mutually termination agreement (article 1140 of the French Civil Code)
- Error: the employee is mistaken, does not understand what the signature of the termination form implies (article 1132 of the French Civil Code).
The French Supreme Court recently clarified the notion of consent of an employee executing a mutually agreed termination in the context of a job protection plan (« PSE ») (FSC, March 17, 2021, n°19-25.313).
In this case, an employee signed a mutually agreed termination form on December 10, 2013. On December 18, 2013, she was informed that a PSE was being prepared, whereby her position would be eliminated.
The employee challenged the mutually agreed termination, arguing that she did not give her full consent as she had not been informed of the ongoing PSE. Consequently, she requested that the mutually agreed termination be requalified as an unfair dismissal and claimed for damages.
The Court of appeal held that, since she had not used her right to withdraw from the agreement (for 15 calendar days after signing), her consent was not flawed.
The employee took her case to the French Supreme Court, which confirmed the Court of appeal’s decision. For the Supreme Court, she indeed still had the possibility to withdraw when she was informed of the upcoming PSE.
This recent case must be put in perspective with another decision of the French Supreme Court: in the latter case, an employer was convicted for misrepresentation, given that it had not disclosed to the employee the existence, at the date of the mutually agreed termination, of an ongoing PSE providing for the elimination of his position. This misrepresentation was considered as a determining factor of consent and the mutually agreed termination was considered null and void (Cass. soc., 6 Jan. 2021, nº 19-18.549).
The main difference between these two cases is likely to be found in the timing the information was given (before or after the end of the 15-day withdrawal period).
NB. The mutually agreed termination cannot be used as a means to circumvent the rules of collective redundancy and thus deprive the employees of the related guarantees: if they have an economic ground and are part of a process of workforce reduction, of which they constitute one or more of the modalities, the mutually agreed terminations must be taken into account in order to determine the applicable procedure of information and consultation of the Social and Economic Committee, as well as the employer’s obligations in terms of a job protection plan (FSC, March 9, 2011, n° 10-11.581).