Actance Tribune
What's NEW under French Employment Law?
N° 35 – February 6, 2025
The recognition of “institutional moral harassment” by the French Supreme Court
In a highly anticipated decision, the Criminal Chamber of the French Supreme Court has recognized, for the first time, the concept of “institutional moral harassment” (Cass. Crim., January 21, 2025, No. 22-87145).
The French Supreme Court had to determine whether company top executives could be convicted (alongside executive managers, notably those in human resources departments) for harassment resulting not from direct actions towards an identified employee, but from a company policy that they knew could lead to the deterioration of working conditions for the employee community.
In this case, the company policy had been designed to push employees to leave by pressuring managers who, in turn, pressured their teams by creating an anxiety-inducing work environment (using, in particular, multiple and disorganized reorganizations, repeated incentives to leave, forced geographical and/or functional mobility, work overload or lack of work, etc.).
The French Supreme Court upheld the decisions of the Correctional Court and the Court of Appeal, declaring the company’s executives, along with the senior managers, guilty of institutional moral harassment.
After reaffirming that the decision-making bodies of the company retain the monopoly over their strategic decisions, the French Supreme Court emphasized that such policies must not amount to harassment.
To this end, it defined institutional moral harassment, which, according to it, falls within the scope of moral harassment sanctioned by Article 222-33-2 of the Penal Code, as actions aimed at implementing, knowingly, a company policy:
- with the purpose or effect of degrading the working conditions of all or part of the employees to achieve staff reductions or any other managerial, economic, or financial goal;
- likely to infringe upon employees’ rights and dignity, to impair their physical or mental health, or jeopardize their professional future.
This concept of institutional moral harassment places an obligation on company management to consider the human impact of all decisions affecting the organization.
The redeployment opportunities offered during a dismissal on economic grounds procedure must comply with a very strict formalism
As a reminder, the employer must, before notifying a dismissal on economic grounds, conduct a serious and good-faith search for redeployment positions and present them to the affected employees.
Redeployment searches must comply with strict formal requirements set by the Labor Code, with no exceptions permitted.
Thus, the employer must either:
- personally address redeployment offers to each employee
or
- disseminate a list of available positions to all employees (Article L. 1233-4).
Article D. 1233-2-1 of the Labor Code specifies that these offers must contain:
- the job title and its description;
- The employer’s name;
- the nature of the employment contract;
- the location of the position;
- the remuneration level;
- the position classification.
Additionally, they must specify the tie-breaking criteria for selecting the redeployed employee in the event of multiple applications for the same position, as well as the deadline for employees to submit their written application.
In two recent decisions, the Social Chamber of the French Supreme Court ruled on the consequences of omitting one of the mandatory legal mentions in a redeployment offer sent to an employee concerned by a procedure of dismissal on economic grounds.
In a ruling dated October 23, 2024 (No. 23-19.629), the French Supreme Court held that the mere omission of any legally required mention renders the offer imprecise. This constitutes a breach of the employer’s redeployment obligation, thereby depriving the dismissal of cause.
In this case, the offer received by the employee did not mention the location of the position, the classification of the position, or the nature of the employment contract.
The French Supreme Court also clarified that no mention beyond those specified in the Labor Code should appear in the offer (except for provisions set by collective agreements).
In a ruling dated January 8, 2025 (No. 22.24.724), the French Supreme Court, strictly applying Articles L. 1233-4, paragraph 4 and D. 1233-2-1, III, held that omitting the tie-breaking criteria for multiple applicants renders the offer imprecise. This prevents employees from making an informed decision. For the first time, the Court ruled that such an omission deprives the dismissal of cause.
These rulings highlight the importance of meticulous attention to the drafting and dissemination of redeployment offers.
Tax residence and affiliation to a foreign social security scheme have no impact on the “forfait social” contribution for directors
The remuneration paid to members of the supervisory board of public limited companies (known as “jetons de présence”) does not constitute a salary and is not subject to social security contributions, provided these individuals are not affiliated with the general social security scheme.
However, these remunerations are subject to a specific contribution called “forfait social”, at a rate of 20%, under Article L. 137-15 of the Social Security Code.
This rule applies even if the individual is affiliated with a foreign social security scheme.
This was confirmed by the French Supreme Court in a case involving a limited company headquartered in France, whose president resided in Belgium, was affiliated with and contributed to the Belgian social security scheme.
The company argued that the « forfait social” should not apply to this remuneration, as it is a charge intended to finance the French social security system, of which the director was not a member. Therefore, it claimed, the contribution reduced the director’s remuneration without offering any corresponding benefits.
In a ruling dated June 6, 2024 (No. 21-23.396), the French Supreme Court dismissed the appeal, confirming that limited companies headquartered in France must apply this “forfait social” contribution to the remuneration of their directors, regardless of their tax residence or social security affiliation.
This ruling serves as a reminder of the importance for companies to ensure compliance with their social contribution obligations.