OD FLASH | Business transfer : no compensation for employee losing RSU benefits due to legal transfer of employment contract

Cour de cassation, chambre sociale, 18 juin 2025, n° 23-19.748

Court of Cassation, Social Chamber, June 18, 2025, No. 23-19.748

Following a global reorganization of an international group, the closure of several facilities in France was considered, and a job protection plan (“plan de sauvegarde de l’emploi”) was established and implemented. However, the operations of certain sites were transferred, as part of the transfer of an autonomous economic entity (R&D activities for embedded software), to another company effective July 1, 2017, in accordance with Article L. 1224-1 of the French Labor Code. This resulted in the automatic transfer of the employment contracts of the affected employees.

Prior to this transfer, the transferring company had implemented a Restricted Stock Unit (RSU) plan, offering free share awards (Attribution Gratuite d’Actions – AGA). As required by law, the plan included a continuous employment condition: if the employee left the company for any reason (except retirement or disability), any unvested shares would be automatically cancelled on the date of contract termination.

In this case, as noted above, the company that had implemented the RSU plan transferred part of its business to a third-party company, along with the employment contracts tied to the autonomous economic entity. As a result, employees affected by this transfer lost the benefit of the unvested RSUs at the time of the transfer due to the change in employer.

Feeling aggrieved, the employees brought their case before the labor tribunal (conseil de prud’hommes), seeking, among other things, compensation for the lost opportunity to acquire the shares. After their claims were rejected by the lower courts, the employees filed an appeal before the Court of Cassation.

One of the key questions posed to the Court was whether an employee, in the absence of any misconduct, could receive financial compensation for the lost opportunity to acquire RSUs that were subject to vesting conditions.

The employees argued that the clause requiring presence at the vesting date should not be enforceable against them, given that their departure was not voluntary but rather the result of a legal transfer of their employment contract. In their view, the transfer artificially prevented fulfillment of the vesting condition, and the condition should therefore be deemed met. They also referenced case law on bonus payments, which holds that a right accrued over a worked period cannot be subject to presence at a later payment date.

The Social Chamber of the Court of Cassation rejected this reasoning. It reiterated that RSU grants involve a vesting period, at the end of which the employee becomes the owner of the shares only if the plan’s conditions are met—which was the case here. The Court observed that the RSU plan made no distinction based on the manner in which the employment contract ended (except for disability or retirement). Therefore, in the absence of any specific and more favorable provisions in the RSU plan for employees whose contracts are transferred under Article L. 1224-1 before the end of the vesting period, the unvested RSUs are considered forfeited. Consequently, employees cannot claim compensation for the lost opportunity to benefit from the plan.

Moreover, the Court of Cassation took the opportunity to clarify the legal nature of RSUs: these are not considered part of remuneration, but rather a separate benefit, designed to retain employees or provide them with financial capital. Therefore, when an employee is no longer employed at the vesting date—even due to a legal transfer of the employment contract—they cannot claim compensation, unless they can prove that the employer acted fraudulently in carrying out the transfer.