OD Flash | A settlement agreement drafted in general terms bars compensation for the anxiety-related prejudice arising after the agreement.

French Supreme Court (Cour de cassation), Social Division, November 6, 2024, Nos. 23-17.699, 23-17.700, 23-17.701

Pursuant to article 2044 of the French Civil Code, a settlement agreement is a contract through which parties resolve an existing dispute or prevent a future one. In the context of employer-employee relationships, such an agreement may arise following the termination of an employment contract. In a ruling dated November 6, 2024, the French Supreme Court addressed the admissibility of a claim for compensation by an employee for anxiety-related prejudice arising after the conclusion of a settlement agreement.

In this case, three employees concluded settlement agreements with their employer after the termination of their respective employment contracts on January 20, 2009, November 9, 2009, and July 8, 2016. On October 25, 2016, by decree published on November 1, 2016, the facility of the company where these employees had worked was listed among those granting entitlement to the Early Retirement Allowance for Asbestos Workers (ACAATA) for the period from 1964 to 1996.

In 2017, the employees filed claims before the labor court seeking recognition that they had been exposed to asbestos fibers during the performance of their employment contracts under conditions amounting to a breach of the contractual absolute safety obligation. They also sought to have their employer ordered to pay compensation for their anxiety-related prejudice. The labor court and subsequently the Court of Appeal declared their claims inadmissible.

The Court of Appeal noted that the settlement agreement dated January 20, 2009, following the termination of the employment contract, contained general clauses whereby the employees waived all claims or actions, whether existing or future, arising out of the performance or termination of the employment contract. The lower courts consequently held that, due to the res judicata effect attached to these settlement agreements, the employees’ claims were inadmissible.

The employees appealed to the Supreme Court (Court of Cassation), arguing that parties cannot be deemed to have waived a right that did not exist at the time the settlement agreement was concluded. They argued that the listing of the facility as eligible for the allowance, occurring after the settlement agreement’s conclusion, rendered their claims for compensation admissible.

The Court of Cassation dismissed the appeals. It held that a claim for compensation against the employer arising from the listing of the facility after the conclusion of a settlement agreement drafted in general terms is inadmissible. By generally waiving all claims and actions, the employees could not subsequently seek compensation for the anxiety-related prejudice arising from a decree published after the settlement agreement’s conclusion.

With this decision, the French Supreme Court reaffirmed its previous case law, whereby an employee who enters into a settlement agreement drafted in general terms cannot seek compensation for anxiety-related prejudice, even when the listing of the facility as eligible for the allowance occurs after the agreement’s conclusion (Cass. Soc., February 21, 2017, No. 15-28.720; October 6, 2017, No. 16-23.891). This decision underscores the utility of transactional agreements, which effectively bar subsequent legal actions.