Bankruptcy Law

In accordance with Article L. 1224-1 of the Labor Code, when an employer's legal status changes, notably through succession, sale, merger, transformation of the business or incorporation of the company, all employment contracts in force on the date of the change subsist between the new employer and the company's personnel. By virtue of this text, the transfer of a debtor company automatically enta …

Resumption of employment contracts

In accordance with Article L. 1224-1 of the Labor Code, when an employer's legal status changes, notably through succession, sale, merger, transformation of the business or incorporation of the company, all employment contracts in force on the date of the change subsist between the new employer and the company's personnel. By virtue of this text, the transfer of a debtor company automatically entails the continuation, with the transferee, of the employment contracts of employees who have not been made redundant under the transfer plan . However, the sale plan may provide for redundancies  and prevent the transfer of the employment contracts of employees, even protected employees, to the transferee . Consequently, the temporary placement of an employee in the service of the company which is to take over the operation of the business, pending his dismissal, does not preclude the enforcement of this measure by the debtor, provided that it was provided for in the sale plan . In the absence of such provisions, the debtor's dismissal of an employee representative without the authorization of the labor inspector, on the unjustified grounds that he was not on the list of contracts taken over , constitutes an offense of obstructing his functions.

Since redundancies can only be validly pronounced if they are provided for in the transfer plan , and mentioned in the judgment adopting it, those notified to employees prior to the plan are null and void. Indeed, the Social Chamber of the Court of Cassation considers that the transfer to an assignee who has subsequently taken over part of the debtor's staff entails, notwithstanding the temporary interruption of activity, the transfer of an autonomous economic entity retaining its identity, and renders the dismissals pronounced null and void . This is all the more true when the plan does not provide for redundancies on economic grounds, but only for a list, devoid of any value, of the employees taken over, in which he or she is not included . A fortiori, an employee who has been made redundant by the debtor and hired by the transferee of the company cannot be dismissed again by the latter at the end of a trial period, since the contract has continued ipso jure under Article L. 1224-1 of the Labor Code, the application of which renders the first redundancy null and void . The text also precludes the transfer plan from providing for the dismissal of all employees and the subsequent hiring of a certain number .

The protected employee's contract, which is still in force if his dismissal by the debtor is null and void for having taken place despite the refusal of authorization by the labor inspector, must be transferred to the transferee company, which must reinstate him and pay him the advance on the wages due to him . He may also challenge his dismissal for economic reasons, even if it was carried out with the authorization of the labor inspector, before a transfer plan is adopted, on the grounds that it was unfair, before a court of law, provided he does not challenge the validity of the administrative decision . If the employee has been working for the purchaser from the date of the decision approving the sale plan to the date of the authorization for dismissal, he or she may claim compensation from the purchaser .

Employees whose redundancy has been rendered ineffective may not claim redundancy pay from the seller , and are required to repay it if they have already received it . Nor can they hold the transferor liable for the consequences of changes made to the employment contract by the transferee , except in cases of fraudulent collusion .

Article L. 1224-2, 1° of the Labor Code specifies that the new employer is not bound, with regard to employees whose employment contracts remain in force, by the obligations incumbent on the former employer at the date of the modification. This provision concerns debts arising from the performance of the employment contract prior  to the judgment approving the sale plan, such as salaries, compensation and damages for dismissal without real and serious cause . It does not, however, cover benefits granted to employees under a unilateral commitment made by the former employer or under a collective agreement, which are automatically transferred to the transferee . For example, the debtor's unilateral undertaking to pay its employees an end-of-year bonus, pursuant to Article L. 1224-1 of the Labor Code, is transferred to the transferee when the transfer is carried out as part of the transferor's insolvency procedure, without this being prevented by the conditions set out in the transferee's offer accepted by the commercial court . The transferee may only terminate the agreement on condition that he gives individual notice to the employees and employee representative bodies within a timeframe that allows negotiations to begin . The obligation arising from a collective agreement is not transferred if the agreement has lapsed . Similarly, the transferee is not obliged to contribute to supplementary pension schemes set up by the debtor if the latter had interrupted payments to the organizations almost five years prior to the sale plan .

However, the debtor and the transferee may derogate from Article L. 1224-2 and agree to the transfer of certain obligations arising from the performance of the employment contract. The transferee, who has undertaken to take over a certain number of employment contracts and all the vested rights attached to them, must guarantee the debtor the amount of sums due to the employee in respect of overtime, paid leave, standby duty and days of reduced working hours performed within his company, the rights to which have been acquired by the employees on the day they were performed . Thus, if the sale plan is silent on the fate of days saved by employees in a time-savings account, the debtor, with the guarantee of the AGS, and not the transferee, must be liable for them .

Lastly, the transferee to whom part of the debtor company's employment contracts have been transferred may rely on the transaction entered into between the dismissed employee and his first employer, in which the latter waived its right to challenge his dismissal, to oppose the latter's request for reinstatement .

Cass. soc., 6 July 1999, LawLex202200009996JBJ (RJ) ; 12 February 2008, LawLex202300004489JBJ (RJ).

Cass. soc., 26 June 1991, LawLex202300003808JBJ (RJ).

Cass. soc., 21 April 2022, LawLex202300003768JBJ (LJ).

Cass. com., 2 February 1999, LawLex202300003761JBJ (RJ).

Cass. soc., 9 July 1997, LawLex202300003760JBJ (RJ) ; 20 January 1998, LawLex202300003810JBJ (LJ) ; 13 May 2009, LawLex202300003815JBJ (LJ) ; 27 November 2013, LawLex202300003812JBJ (LJ) ; 4 November 2015, LawLex202100003481JBJ (LJ).

Cass. soc., 17 October 2000, LawLex202300003757JBJ (RJ).

Cass. soc., 27 November 2013, LawLex202300003812JBJ (LJ).

Cass. soc., 13 May 2009, LawLex202300003815JBJ (LJ).

Cass. com. 18 January 2011, LawLex202100003483JBJ (RJ) holding that the future burden of paying end-of-career indemnities to employees taken over under an assignment plan, under an insurance contract taken out by the debtor, legally falls on the assignee.

Cass. soc., 23 September 2008, LawLex202300004790JBJ (RJ).

Cass. soc., 30 April 2014, LawLex202300003756JBJ (RJ), emphasizing that the seniority acquired by an employee, taken over by the transferee, in his previous jobs within the same entity, must be taken into consideration by the transferee.

Cass. soc., 12 September 2018, LawLex202300003759JBJ (RJ).

Cass. soc., 12 March 2008, LawLex202100003482JBJ (RJ).

Cass. soc., 22 January 2008, LawLex202100003591JBJ (RJ).

Cass. soc., 17 June 2003, LawLex202100003489JBJ (LJ).

Cass. soc., 24 May 2000, LawLex202300004449JBJ (RJ).

Cass. soc., 30 June 2016, LawLex202100003495JBJ (LJ).

Cass. soc., 7 April 2010, LawLex202100003484JBJ (LJ).

Cass. soc., 20 November 2013, LawLex202300003809JBJ (LJ).

Cass. soc., 18 December 1991, LawLex202300003807JBJ (RJ).

Cass. crim., 17 March 1992, LawLex202300003805JBJ (RJ).

See, for example, Cass. soc., 8 December 2004, LawLex202100003479JBJ (RJ), holding that a purchaser commits fraud which gives rise to a claim for damages for dismissal without real and serious cause, when he dismisses one of the debtor's employees and replaces him on the same day with another employee.

Cass. soc., 31 March 1998, LawLex202300003811JBJ (LJ).

Cass. soc., 12 May 2021, LawLex202300003758JBJ (RJ).

Cass. soc., 31 March 1998, LawLex202300003769JBJ (RJ).

Cass. soc., 30 June 1992, LawLex202100003476JBJ (RJ).

Bankruptcy Law

888. Resumption of employment contracts

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888. Resumption of employment contracts

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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