France: important Supreme Court decision - the absence of economic grounds will give rise to damages, but the dismissals will still be effective

The French Supreme Court today handed down an important decision for French employers considering collective redundancies.  It held that in the absence of real and serious economic grounds, the dismissed employees will be entitled to damages payments, but cannot obtain a finding that their dismissals are null and void.

Dismissals may only be found to be null and void in the event that the terms of a social plan are found to be insufficient.

This is an important decision, overturning a decision of the Paris Court of Appeal in May 2011, which had held that Viveo could not implement a collective redundancy procedure as it was found not to have real and serious economic grounds.  Various other High Court decisions in 2011 had similarly found that an absence of economic grounds meant that the employees would not simply be entitled to damages claims, but that the redundancy procedures were null and void – i.e. that the companies have to continue to employ the employees.  This had created enormous uncertainty for employers in France considering collective redundancies.

The Supreme Court's decision has therefore now overturned the case law trend of 2011 – it therefore remains the case that the absence of economic grounds will give rise to damages claims but the dismissals will still be effective (provided the terms of the social plan are adequate).

Cass soc. 3 May 2012 n° 11-20.741 Viveo France