OD Flash | The termination by mutual agreement of the employment contract between the expatriate employee and the foreign subsidiary must be qualified as redundancy within the meaning of Article L.1231-5 of the French Labour Code.

Cass. soc., 15 mai 2024, n°22-20.199

As a reminder, article L.1231-5 of the Labour Code stipulates that when an employee recruited by a parent company has been made available to a foreign subsidiary and an employment contract has been signed with the latter, the parent company must ensure his repatriation in the event of dismissal by the subsidiary and offer him a new job compatible with the importance of his former duties within the subsidiary.

In its decision of 15 May 2024, the Court of Cassation ruled on the need for the employer to comply with the obligations set out in Article L.1232-5 of the Labour Code when the employment contract is terminated by mutual agreement rather than by dismissal.

In this case, an employee was hired by an advertising company as a “senior IT developer” under a fixed-term contract for the period from 1 February 2011 to 30 December 2011. He was then appointed to manage the company’s French subsidiary in the Philippines from 12 January 2012. This employment relationship was terminated by mutual agreement between the parties on 21 October 2014, although the Court of Cassation’s decision does not specify the circumstances of the termination.

The employee complained that the company had failed to fulfil its obligation to repatriate him at the end of his employment contract pursuant to Article L.1231-5 of the French Labour Code. Therefore, on 28 July 2016, he brought an action before the Labour Court seeking a declaration that his dismissal was without real and serious cause and an order that the company pay various sums on the grounds that it should have repatriated him at the end of his employment contract with the subsidiary and offered him a new job compatible with the importance of his previous duties within the subsidiary. Failure to do so meant that the failure to repatriate and reinstate the employee could be construed as a dismissal without real and serious cause. 

The lower courts upheld the employee’s claim and ordered the company to pay the sums relating to the dismissal without real and serious cause. The company then appealed to the French Supreme Court. In support of its appeal, the employer argued that the parent company was not obliged to repatriate and reinstate the employee when the employment contract was terminated by mutual consent validly given by the employee. The employee, who had entered into a termination agreement with the employer, had failed to prove that this decision had been taken as a result of moral pressure constituting a lack of consent, so that the agreement could be considered null and void.

The Social Division of the French Supreme Court dismissed the company’s appeal based on Article L. 1231-5 of the Labour Code, stating that the Court of Appeal had correctly found that the employment contract between the employee and the Philippine subsidiary had been terminated by mutual consent by means of the termination document jointly signed by the parties on 21 October 2014. Consequently, it added that “since the amicable termination of the employment contract between the employee and the subsidiary must be qualified as a dismissal within the meaning of Article L. 1231-5 of the French Labour Code, the parent company was obliged, following the termination of the employment contract with the subsidiary, to reinstate the employee and offer him a new job compatible with the importance of his former duties within the subsidiary”.