OD FLASH | Expatriation: Reminder on employee savings plans and clarification on pay slips

Cass. soc., 15 mai 2024, n°22-21.109

An employee was hired as an export manager under a French employment contract. He was then expatriated to take up the position of commercial and industrial development director of the Mexican subsidiary. During his expatriation, his employment contract was not terminated under French law.

The employee was subsequently dismissed by the French company for serious misconduct.

He then brought an action before the labour tribunal to challenge his dismissal and to obtain payment of the profit-sharing and incentive bonuses established by his French employer, as well as pay slips relating to his remuneration in that company.

On appeal, the Court of First Instance dismissed

– his requests for payment of the profit-sharing and incentive bonuses to the foreign subsidiary to which he had been posted, on the ground that the expatriate had ceased to be part of the workforce of his French employer

– his request for pay slips on the grounds that he was no longer covered by the French social security system since his expatriation and that the sums paid to him by his French corporate employer were not subject to French social security contributions, so that it was not obliged under French law to issue a pay slip.

The employee then appealed to the French Supreme Court.

The Social Division of the Cour de Cassation upheld all of his claims relating to the employee savings plans and pay slips.

With regard to profit-sharing, it overturned the decision of the Court of Appeal on the basis of Article L. 3342-1 of the French Labour Code, which states that all employees of a company covered by profit-sharing agreements benefit from their provisions. Consequently, all these employees must be able to benefit from the distribution of the company’s results. The Court of Cassation reiterated that a clause in a profit-sharing or incentive agreement which excludes employees posted abroad or expatriates is considered to be unwritten.

Thus, since the employee had never ceased to be a member of the French company’s workforce during his period of secondment to the Mexican subsidiary, he was entitled to the profit-sharing and incentive bonuses paid under these agreements.

With regard to pay slips, the Court of Cassation ruled, in accordance with Articles L. 3243-1 and L. 3243-2, paragraph 1, of the Labour Code, that the employer must provide a pay slip to all employees working anywhere for one or more employers at the time of payment of wages. In this case, the employer, a French company, had paid part of the employee’s salary during his stay abroad and was therefore obliged to provide him with a salary statement, regardless of the fact that the employee was not affiliated to the French social security system.

In this judgment, the Court of Cassation therefore reiterates its established case law on the impossibility for employers to exclude expatriate employees from the benefits of employee savings schemes (Cass. soc., 28 Nov. 2006, no. 04-19.623; Cass. soc., 6 June 2018, no. 17-14.372). It also clarifies that employers are obliged to issue pay slips to expatriate employees if they pay them part of their remuneration while they are abroad, regardless of whether they are affiliated to the general French social security scheme.