How to deal with the equal treatment principle in the framework a voluntary transfer of employment contracts ?

?????Fresh news from the French Supreme Court on how to deal with the #equal #treatment of #employees principle in the framework of a voluntary #transfer of #employment #contracts.

??First of all! What is a voluntary transfer of employment contracts? A voluntary transfer of employment contracts is a #contractual transfer approved by the employee, the #employer and the host #company to transfer the employee from one entity to another. A voluntary transfer requires the employee’s approval in contrast to a #legal transfer organized by article L. 1224-1 of the Labour code under which the employee’s transfer is automatic and does not require the employee’s consent. The automatic transfer applies only to employees that are part of a transfer of an autonomous economic entity that preserves its identity and activity within the host company.

And now… how is the equal treatment principle understood under French Labour law? The principle of equal treatment allows employees of the same company to benefit from the same #advantages, #benefits and #remuneration as their colleagues placed in an identical or comparable situation. Derogations to this principle of equal treatment must be justified by objective reasons. Those objective reasons are usually recognized by case law.

For a long time and until June 2021 (Cass. Soc., 23 juin 2021, n° 18-24.810), the French Supreme court found that the legal transfer (only) justified that the employer maintained advantages and benefits to the transferred employees that were not applied to the employees of the host company. The French Supreme court however considered that for voluntary transfers no objective reasons justified that the transferred employees could benefit from advantages that were not extended to the employees from the host company…. This reasoning was justified by the fact that under a legal transfer the terms and conditions of the initial contract were legally and automatically transferred from one entity to another whereas under a voluntary transfer the transfer of the employment contract resulted only from the parties’ contractual agreement. This was a tricky situation for the host company ?? as any voluntary transfer for which it contractually agreed to maintain the transferred employee’s initial contractual terms and conditions meant that he would have to offer the same terms and conditions to all his employee’s (old and new) placed in a comparable situation.

????The Supreme’s court position changed recently and now considers that in the event of a voluntary transfer of the employment contract, the obligation of the new employer to maintain for the benefit of the employees taken over the rights and benefits that were granted to them on the day of the transfer, justifies the resulting difference in treatment compared to other employees. This reasoning was recently confirmed by the Supreme court’s decision dated September 28, n° 21-12.318.

In the present case, the employees of a cleaning service provider, were taken over by a private hospital through a voluntary transfer of their employment contracts.

The employees taken over benefited from the maintenance of their attendance bonus granted by their former employer. The other employees of the company (the initial employees from the clinic) brought an action before the Labour court requesting payment of these bonuses based on the principle of equal treatment, as they considered that they should also benefit from them since they were performing similar tasks.

For the Court of Appeal, this difference in treatment was not justified by any objective element: it considered that the employer had to ensure strict #equality between employees placed in a similar situation and assigned to comparable tasks. It therefore ordered the employer to pay back the attendance #bonuses to every employee placed in a comparable situation.

The Court of Cassation disagreed: it decided that the employer was entitled to maintain the attendance bonus for the sole benefit of the transferred employees without this constituting a difference in treatment, since the employer had voluntarily applied Article L. 1224-1 of the Labor Code. The voluntary application of Article L. 1224-1, like its application by operation of law, is a justification for the difference in treatment.

?Cass. soc., 28 sept. 2022, n°21-12.318

#employee #labour #france #hr #contract #legal #news #casestudy #caselaw #tupe #transfer #benefits #remuneration #lawyer #employer