Some good news about psychological harassment, co-employment, and “bad leaver” clauses!

Article Employment and Social Security Law | 05/09/16 | 3 min. | Virginie Devos

While the end of the summer was marked by the “Employment Law” of August 8, 2016, the rulings entered by the French Supreme Court in the months of June and July 2016 should not be overlooked.

In the field of psychological harassment[1] or bullying in the workplace, the French Supreme Court clarified two major points. In a ruling on June 8, 2016 (No. 14-13.418), the Court set the review stages to be followed by trial judges in cases involving psychological harassment while at the same time narrowing their leeway. Trial judges must have examined all of the facts advanced by the employee in support of the harassment claim, and take into account any medical records that may be produced. They must then assess whether the facts established by the employee, viewed as a whole, permit a presumption of psychological harassment within the meaning of §L. 1152-1 of the Labor and Employment Code; in such case, it is up to the trial judge to assess whether the employer has proven that the course of conduct asserted does not meet the test for harassment and that the employer’s decisions or acts were justified by reasons extraneous to any form of psychological violence. The Court indicated that if a trial judge respects these stages, then an appeal contesting the trial court’s findings can only fail.

Also, businesses will doubtless be relieved by a ruling on June 1, 2016 (No. 14-19.702) concerning the link between psychological harassment and safety obligations. The Court adopted a less harsh – and thus more acceptable – solution than in previous case law. It considered that an employer who “evidences having taken all of the prevention measures required under §L 4121-1 and L 4121-2 of the Labor and Employment Code and who, informed of the existence of facts likely to qualify as psychological harassment, took immediate measures to put an end to them” cannot be held in breach of its legal obligation to take the necessary measures to ensure the safety and to protect the physical and mental health of its workers. The Court clearly took a step away from its earlier position in the famous Air France case (Cass. soc. November 25, 2015 No. 14-24.444), marking a real move towards a duty of best efforts and away from the earlier dubious outcome-based strict liability. We are now back to prevention!

Other decisions warrant a quick mention. As could be expected, the French Supreme Court decided to request a preliminary ruling on constitutionality from the French Constitutional Court, to determine the constitutionality of a contested minimum legal compensation level in case of dismissal without real and serious cause, i.e., unfair dismissal (Cass. Soc. July 13, 2016, No. 16-40.209). This determination has yet to be made.

Similarly, the Court has confirmed its narrow interpretation of the notion of co-employment, which it reiterated in its ruling in the “Continental” case on July 6, 2016 (No. 14-27.266). For there to be co-employment, there must be an abnormal “confusion of interests, of activity and of management”, “manifested by interference by a company in the economic and labor management” of another company in the same group. In another ruling on July 6, 2016 (No. 15-15.481), it was the specific facts of the case (transfer of teams, including HR; loss of hiring power; handing of all issues of a contractual nature in several fields) that warranted a finding of co-employment.

Lastly, the commercial division, in a decision dated June 7, 2016 (No. 14-17.978), came out in favor of “bad leaver” clauses. This type of contractual mechanism typically provides that an employee holding shares in the employer company is required to sell them back to the employer upon leaving the company, in some cases at a reduced price. The ruling seems to validate this mechanism by considering that no illegal financial penalty is involved. However, the order of February 10, 2016 reforming the law of obligations should be kept in mind, as it requires a high level of vigilance at the time of drafting these clauses./.

[1] The concept of harcèlement moral, which can be translated as moral or psychological harassment is the equivalent of the US concept, although they do not overlap completely, of hostile work environment harassment”.

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