Are you a company director who wants to know whether you can be held liable for redundancies?
First of all, we need to distinguish between criminal liability and civil liability. The former is incurred by the Public Prosecutor’s Office in the event of the commission of an offence under the Penal Code, in order to punish. The latter is incurred by the person who considers himself to be the victim, with the aim of compensating for the damage caused.
⚠ These two responsibilities can be combined.
As a manager, the decisions or management choices you make may have consequences that could engage your civil or criminal liability.
Civil liability
As a company director, you may be held liable for a fault in the management of your company. Although it is not, in principle, up to the judge to assess the employer’s management choices and their consequences ( Cass. plen. December 8, 2000, no. 97-44.219 ), the latter assesses the real and serious nature of the redundancies.
To do this, the judge assesses the economic reason given for the dismissal (such as economic difficulties or cessation of activity), and checks that this reason is not due to any fault on the part of the employer.
As mismanagement is not clearly defined, it is assessed by judges according to the specific circumstances of each situation. In particular, it is designed to penalize negligence and fraudulent maneuvers resulting in redundancies.
For example, the compulsory liquidation of a company resulting from the employer’s fault or carelessness, and which led to the company ceasing to operate, does not constitute a real and serious reason for dismissal(Cass. Soc., July 8, 2020, no. 18-26.140).
However, a simple error in assessing the risk inherent in any management choice does not in itself constitute such a fault (Cass. soc. December 14, 2005 no. 03-44.380 ). It may be a matter of simple negligence or carelessness.
Subsequently, in order to engage the liability of the directors, it is necessary to establish proof of this fault, and a causal link between this fault and the prejudice suffered by the company or the employees.
Third parties may also seek to hold company directors liable. However, they can only invoke faults that are detachable from the duties of management. In such cases, they will need to demonstrate intentional misconduct of a particularly serious nature, incompatible with the normal exercise of management functions.
Lastly, associates may seek to hold directors liable for any damage suffered by the company or associates, on the basis of the French Commercial Code.
Criminal liability
If a company commits a criminal offence, its directors may be held criminally liable. Such liability may arise, for example, in cases of tax fraud, forgery, negligence of safety regulations, etc.
☝ In the context of redundancies, criminal liability will therefore only be incurred if criminal offences can be characterized.
Certain offences are also provided for in the French Commercial Code, and are designed to punish managerial behavior in a context of economic difficulty. This is the case, for example, of misuse of corporate assets(article L.241-3 4° of the French Commercial Code), which consists in a manager knowingly using the company’s assets, credit, powers or votes for direct or indirect personal ends.
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