All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

Co-employment is a judicial creation that involves recognizing the status of employer to a person who is not a signatory to the employment contract, in order to protect employees when the primary employer is unable to fulfill its obligations towards them. Applied to a group of companies, it allows the recognition of the parent company as a co-employer, particularly to hold it accountable for the c …

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ARSEGUEL, Labor law, cutting-edge law: about the co-employer, RPC 2012, Dossier 6; CALICE and DIRIART, The new contentious fronts of dismissal for economic reasons - The impossible equation between the existence of the group and the legal autonomy of the company, Cah. dr. entr. 2012, Dossier 27; GAILHBAUD, From the theory of the co-employer to the notion of co-employment - Contribution to the renewed study of the quasi-contract, Gaz. Pal., 4 August 2012, 11; REYNES, Group of companies, the theory of co-employment, Cah. dre. entr. May-June 2012, 15; MORVAN, The identification of the co-employer, JCP S 2013, No 1438; d'ORNANO, The co-employer, JCP S 2013, No 1533; AUZERO, The legal nature of the co-employment link, SSL 2014, suppl. 1619; PEROTTO and MATHEZ, Is the liability of the parent company inevitable? Cross perspectives on corporate groups and the risk of co-employment, JCP S 2014, No 1262; BEAL and TERRENOIRE, Co-employment and corporate groups: peaceful connections?, JCP E 2015, No 1105; DUMONT, The nebula of co-employment, JCP E 2015, No 1222; PAGNERRE, Co-employer: third party or party to the employment contract?, JCP S 2015, No 1436; LAFARGUE, At the heart of paradoxes, co-employment, JCP S 2018, No 1253; PAGNERRE, The ebb of co-employment, still alive but a little more dead, JCP S 2021, No 1019; TERNISIEN and DEMOULIN, The liability of parent companies towards the employees of their subsidiaries: myth or real risk?, JCP G 2023, No 496.

Co-employment is a judicial creation that involves recognizing the status of employer to a person who is not a signatory to the employment contract, in order to protect employees when the primary employer is unable to fulfill its obligations towards them. Applied to a group of companies, it allows the recognition of the parent company as a co-employer, particularly to hold it accountable for the consequences of the dismissal of one or more employees of its subsidiary. Such recognition, as it significantly deviates from the principle of autonomy of legal entities, is nevertheless subject to strict conditions.

Initially, co-employment was characterized by the presence of an effective subordination link between the employee and the parent company . However, being too restrictive, this criterion was gradually abandoned in favor of characterizing the parent company's interference in the personnel management of the subsidiary, leading to a total loss of decision-making autonomy for the latter , even when these acts are carried out by a de facto manager . In the absence of a subordination link, a company that is part of a group can be considered a co-employer with respect to the personnel employed by another if there exists between them, beyond the necessary coordination of economic actions among companies belonging to the same group and the state of economic domination that this membership may generate, a confusion of interests, activities, and management manifested by interference in the economic and social management of the latter . Such interference is only manifested when the subsidiary suffers, due to the actions of its parent, a total loss of decision-making autonomy, particularly in the area of economic and social management . This is the case when the parent company deprives it of its IT, accounting, and human resources teams and its competence in contractual, administrative, financial, and legal matters , dispossesses it of its own clientele, or substitutes itself in the management of its personnel in both individual and collective relations and ensures its financial and accounting management . Conversely, elements such as the centralization of support services, dividend remittances, cash pooling and compensation agreements, unpaid debts to the subsidiary, billing for services partially without consideration for the latter, control of its billing during a limited period, and the granting of an exceptional bonus to its employees, cannot characterize a co-employment situation . The same applies to the impact of the group policy determined by the parent company on the economic and social activity of its subsidiary, as well as on its future, and its commitment to guarantee the execution of obligations related to the site closure and job eliminations . The fact that the subsidiary's managers were in close collaboration with its parent company, received significant financial support from it, and signed a cash and assistance agreement for remuneration  or that the parent company adopted, during the period following the takeover of the subsidiary, decisions aimed at its reorganization within the framework of the group policy, then renounced the financial assistance intended to avoid its judicial liquidation, while involving itself in the search for employee redeployment within the group , is also not sufficient to characterize a co-employment situation. The almost exclusive marketing of the subsidiary's products by the parent company and the provision by the latter of orders and the necessary cash for the payment of the subsidiary's employees' salaries, do not further characterize an apparent co-employment situation arising from a confusion of interests, activities, and management . Finally, even in the presence of a community of economic interests and an interdependence of management bodies between a parent company and its subsidiary, the fact that the latter has its own clientele and management autonomy with respect to its personnel and the organization of its activity and that its employees are not subject to the direction and control of the group, excludes the characterization of a co-employment situation .

Cass. soc., 19 June 2007, LawLex202200010353JBJ and LawLex202200010354JBJ, JCP S 2007, No 1618, note COURSIER.

Cass. soc., 28 September 2011, LawLex202200008945JBJ, JCP S 2011, No 1548, obs. GUYOT; 22 June 2011, LawLex202200007136JBJ, considering that the existence between two companies of a confusion of interests, activities, and management, which manifests, after one takes control of the other, by a total loss of autonomy of the controlled company in managing its activities, particularly in personnel management, confers upon them the status of co-employers; 18 January 2011, LawLex202200007137JBJ, holding that the confusion of interests, activities, and management between two companies, which deprives the subsidiary of any autonomy, since its operational and administrative management is ensured by its parent company, allows them to be considered as co-employers.

Cass. soc., 10 December 2015, LawLex202200010904JBJ.

Cass. soc., 20 May 2014, LawLex202200010906JBJ.

Cass. soc., 26 June 2008, LawLex202200010905JBJ.

Cass. soc., 16 March 2010, LawLex202200010903JBJ.

Cass. soc., 10 December 2015, LawLex202200010904JBJ; 6 July 2016, LawLex202200007133JBJ; 23 November 2022, LawLex202200010902JBJ, JCP E 2023, No 1135, No 7, obs. LASSERRE; JCP E 2023, 1055, obs. BRUNIE; JCP E 2023, 1135, 7, obs. PERRUCHOT-TRIBOULET.

Cass. soc., 14 April 2021, LawLex202200010228JBJ; 25 November 2020, LawLex202200007131JBJ; 18 January 2011, LawLex202200007137JBJ; CA Riom, 14 September 2021, LawLex202200009746JBJ.

Cass. soc., 6 July 2016, LawLex202200007134JBJ.

Cass. soc., 23 November 2022, LawLex202200010902JBJ, préc.

Cass. soc., 9 October 2019, LawLex202100003457JBJ.

Cass. soc., 6 July 2016, LawLex202200007132JBJ; 2 July 2014, LawLex202200007673JBJ, indicating that the fact that the parent company makes decisions within the framework of the group's policy affecting the future of the subsidiary and commits to providing the necessary means to finance social measures related to the closure of the site as well as the elimination of jobs, is not sufficient to characterize a situation of co-employment.

Cass. com., 7 March 2017, LawLex202100001710JBJ.

Company Law (en cours)

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