Commercial Leases/Business Goodwill

The loss of the business or its transfer following the non-renewal of the lease may compel the lessee to dismiss its staff. The severance payments made, which are not compensation for work performed but represent, for the employee, damages, constitute one of the elements of the loss suffered by the lessee due to the refusal to renew and must be included in the calculation of the eviction indemnity …

Severance pay

The loss of the business or its transfer following the non-renewal of the lease may compel the lessee to dismiss its staff. The severance payments made, which are not compensation for work performed but represent, for the employee, damages, constitute one of the elements of the loss suffered by the lessee due to the refusal to renew and must be included in the calculation of the eviction indemnity . In this case, the lessor is required to reimburse the lessee for all costs arising from the dismissal . However, the lessee, who bears the burden of proof, must establish the direct link between the dismissal costs and the non-renewal of the lease and justify the amount of the dismissal costs claimed .

Severance costs, if paid upon presentation of supporting documents, include, in addition to the contractual or statutory severance pay, the notice and paid leave allowances , as well as the amounts paid to Pôle Emploi for the contribution to the financing of the professional security allowance .

Cass. 3e civ., 16 March 1976, LawLex202300012102JBJ, which criticizes the court of appeal for considering that the severance payments the evicted lessee will be required to pay to its employees, particularly under collective agreements, constitute an expense representing the consideration for work already performed and thus deferred salary; 2 February 1982, LawLex202300012103JBJ, which overturns the decision that dismissed the lessee's claim based on the payment of severance to its staff, stating that the sum awarded enables the tenant company to acquire another business ready to be operated by it and that, under these conditions, the lessee does not establish that it is obliged to dismiss its staff, while noting the refusal to renew the lease and the loss of the business.

CA Paris, 5 July 2017, LawLex202300012099JBJ.

CA Toulouse, 26 October 2016, LawLex202300012098JBJ.

CA Orléans, 18 December 2014, LawLex202300012100JBJ.

Commercial Leases/Business Goodwill

282. Severance pay

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Les notions juridiques connexes

282. Severance pay

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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