OD FLASH |Transfer of undertakings: the legal maintenance of a benefit for transferred employees does not preclude the application of a benefit in force in the host company

Cass. soc., 22 mai 2024, n°23-10.214

In this case, a company unilaterally decided to pay its employees a bonus of 12.5% for 2014. However, it refused to apply this commitment to employees who joined the company on 1 January 2014.

An employee therefore brought an action before the Labour Court for payment of the bonus for 2014. He argued that, in the event of a transfer of undertaking, employees whose employment contract has been transferred can immediately benefit from the unilateral commitments in force in the host company, provided that they meet the conditions for benefiting from them.

On appeal, the court granted the employee the right to receive the bonus for 2014, but calculated on the basis of the rate applicable in his original company, i.e. 5%, and not the more favourable rate of 12.5% applicable in the host company. According to the Court of Appeal, in view of the merger, the transferee was legally obliged to maintain for the benefit of the transferred employees the rights they had in their original company under a unilateral commitment in force on the date of the transfer.

The employee then appealed to the French Supreme Court. He complained that the ruling rejected his claim to an annual bonus received by employees of the absorbing company, calculated on the basis of a more advantageous rate than that which he had received in his original company.

The Social Division of the French Supreme Court (Cour de cassation) overturned the appeal ruling, citing articles 1134 of the French Civil Code and L. 1224-1 of the French Labor Code. According to the Court, the transferee company may not deny employees the benefit of collective advantages in the host company, whether established by collective agreement, custom or unilateral commitment by the employer, on the grounds that these employees hold rights under a custom or unilateral commitment in force in their original company on the day of the transfer, or under individual advantages acquired in the event of a collective agreement being called into question.

Consequently, the legal preservation of the former collective status in force in the transferring company does not allow the transferee to refuse transferred employees the granting of a bonus paid in the host company in application of a unilateral commitment. This solution clearly illustrates the difficulties involved in determining the collective standard applicable following a transfer of business, but is in line with the Court of Cassation’s established case law.