The redundancy procedure is a complex one, in which a number of errors can occur.
Some mistakes can have major financial consequences for your company.
1- Respecting the definition of economic redundancy
The French Labor Code precisely defines economic redundancy.
Economic redundancy is pronounced for one or more reasons not inherent to the person of the employee and resulting from the elimination or transformation of a job, or a modification refused by the employee of an essential element of the employment contract, consecutive to :
- Economic difficulties: significant drop in orders or sales, operating losses, deterioration in cash flow;
- Technological change;
- Company reorganization;
- Termination of business.
⚠ Warning: the notion of economic difficulty is very precisely defined by law and very strictly assessed in case law.
For example, a significant drop in orders or sales is deemed to have occurred when the duration of the drop, compared with the same period of the previous year, is at least equal to one quarter for companies with fewer than 11 employees, 2 quarters for companies with at least 11 employees and fewer than 50 employees…
The French Supreme Court also clarified the notion of loss of business or deterioration in cash flow in a recent ruling.
To justify a redundancy plan, it stated that business losses must be significant, serious and lasting in the sector concerned, and on a sufficiently large scale.
If you fail to provide proof of the reality of your economic difficulties, or if they do not comply with legal provisions or case law, the dismissal may be deemed to be without real and serious cause, and you may be ordered to compensate the employee for several months’ salary.
We therefore recommend that you take care when considering dismissing an employee for economic reasons.
2- Compliance with the reclassification obligation
The first step in the redundancy procedure is to implement all the measures needed to avoid redundancies, including the search for new jobs.
The employees concerned should be offered every possible redeployment solution, first and foremost to their current position, but also to other types of position, including those requiring short-term training.
As a gesture of good faith in implementing this obligation, employees can also be informed individually, by registered mail, of the possibility of receiving outplacement offers beyond the national territory.
If your company belongs to a group, you will need to look for redeployment opportunities within the group.
☝ We recommend that you formulate all outplacement offers in writing, individually and precisely, and that you be able to give this writing a date certain.
If this obligation has not been properly fulfilled, or if it is impossible to prove that it has been, the dismissal may once again be deemed to lack real and serious cause, and you may be ordered to pay damages.
3- The proposal for a job security contract
If economic redundancy becomes unavoidable, the employee should be offered the possibility of signing a “contrat de sécurisation professionnel” at the time of the preliminary interview, and should be given the relevant documents so that he or she can be properly informed. The employee should also be informed of the possibility of contacting the public employment service to help him or her make a decision.
The employee has 21 calendar days in which to accept or reject the contrat de sécurisation professionnel.
This period must be respected in its entirety, even if the employee accepts or refuses the proposal during this period.
⚠ Warning: if this proposal is not made to the employee, you may be ordered to pay a contribution equal to 2 months’ gross salary, increased to 3 months if the employee finally joins the contrat de sécurisation professionnelle.
4- Consultation with employee representatives
In the case of individual redundancies, the Social and Economic Committee (CSE) must be consulted if the redundancy is linked to a reorganization of the company or concerns an employee representative.
It will also be consulted on the order of redundancies, unless this issue is already covered by a collective agreement.
When at least two employees are involved in a proposed redundancy plan, the CSE must be informed and consulted, and a meeting of the CSE must be held to discuss the matter.
In companies where there is no CSE, an official statement of absence must be drawn up, failing which the redundancy will be considered irregular.
⚠ If this procedure is not followed, or if no notice of default is drawn up, the employees concerned will be entitled to claim, in addition to the compensation due for their dismissal, a specific indemnity to compensate for the prejudice caused by this failure.
5- Meeting deadlines
The redundancy procedure imposes a number of deadlines that must be strictly adhered to.
Thus, the preliminary interview cannot take place less than 5 working days after presentation of the preliminary interview invitation letter.
The letter of dismissal can only be sent to the employee after a period of 7 working days in the case of small-scale collective redundancies, or even 15 days if the employee is an executive.
The DREETS must also be informed within 8 days of the redundancy letter being sent to the employee.
⏰ If the redundancy procedure has not been complied with, the employee concerned may claim compensation equivalent to one month’s salary.
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The redundancy procedure is particularly complex, with many pitfalls that could result in your company being ordered to pay various sums.
Naturally, DESRUMAUX AVOCATS is at your disposal to help you implement this procedure.
