A CSE, signatory of a collective agreement, is not admissible to invoke, by way of exception, the illegality of a clause of this agreement

Cass. Soc. 19 October 2022, n°21-15.270, Published in the Bulletin

 

  • The facts of the case

On 24 June 2013, an Indian company concluded a participation agreement with the works council of its French subsidiary.

In 2016, the committee made the unfortunate observation that the overall amount of the special participation reserve had fallen sharply over the years, from €212,382 in 2013 to €0 in 2016.

He therefore decided to have the accounts audited by a firm of accountants.

On 19 May 2016, the latter submitted a report to the employee representatives concluding that the amount of the special profit-sharing reserve calculated in accordance with the 2013 agreement was lower than the amount that should result from the formula provided for by law, based on the notion of equity as set out in a legal guide prepared by the DGT in 2014.

Two years after this report, and presumably after numerous internal discussions between the company and the works council, the works council brought an action against the company before the Tribunal de Grande Instance de Nanterre (which has since become the Tribunal Judiciaire) in order to obtain the payment of a supplement to the special participation reserve for the financial years 2014/2015 to 2016/2017.

The supplements requested were significant, amounting in total to approximately 1.4 million euros, which is a particularly important financial issue.

 

The Court decided to grant the demands of the works council (which became the CSE in the course of the proceedings), basing its decision mainly on the report drawn up by the accounting firm, and ordered the company to pay this hefty bill, together with a penalty of €150 per day of delay.

The company naturally appealed this decision to the Versailles Court of Appeal, asking the judge to ensure compliance with the agreement as signed between the social partners. It argued that applying the new calculation rule demanded by the CSE meant changing the terms of the agreement.

The CSE, for its part, went to great lengths to argue that the latter did not apply the legal formula, whereas a derogatory agreement cannot be less advantageous for employees than the legal formula defined by the DGT guide of 2014.

The Versailles Court of Appeal did not follow the reasoning of the Court and the CSE, considering in particular that the latter did not demonstrate that the calculation of the special profit-sharing reserve as it resulted from the 2013 agreement did not comply with the legal formula. In its view, there was a legal vacuum regarding the concept of equity to be taken into account in this case for the calculation of the special reserve.

However, the ETUC decided not to leave it at that, and to appeal to the Court of Cassation.

 

  • The Court of Cassation spares itself a complex legal debate on the notion of equity and simply considers that the CSE’s action is inadmissible

If the company had invoked the inadmissibility of the CSE’s action, it must be noted that it had clearly not done so on the right legal ground.

Indeed, it argued before the Versailles Court of Appeal that the CSE had no interest in taking action, in that it did not demonstrate an infringement of its personal interests or a direct prejudice, and all the more so because the committee had unanimously validated the participation agreement.

The Court of Appeal rejected this argument: more fear than harm since the company won its case before the Court of Cassation.

Surprisingly, the company did not argue that the CSE’s action was inadmissible because it was time-barred under the provisions of Article L. 2262-14 of the Labour Code, which restricts actions to nullify a collective agreement to a period of two months. In this case, this was the case since the agreement was reached in 2013 and the action was brought 5 years later.

Perhaps it had decided not to support such a reasoning, considering that the action of the CSE was justified by the possibility of invoking the exception of illegality, which is not framed by any specific deadline.

This legal mechanism – originating in administrative law – consists in challenging the validity of a regulatory act in order to set aside the individual implementing measure that was taken on its basis.

It thus allows trade unions and staff representatives to circumvent the two-month time limit to invoke the illegality of a conventional text.

 

The Court of Cassation considers, however, and this is where this ruling is particularly interesting, that while the CSE is entitled to use this legal technique to invoke the illegality of a collective agreement, it cannot do so if it is a signatory to this agreement.

Consequently, the possibility of invoking the exception of illegality is reserved for trade unions and ETUCs that are not signatories to a collective agreement.

The position of the Court of Cassation was already apparent in a judgment of 2 March this year, in which it considered it useful to specify that the organisation, invoking an exception of illegality, was “not a signatory of a collective agreement” (Cass. Soc. 2 March 2022, n°20-18.442, Published in the Bulletin).

This solution finally follows the reasoning adopted by the High Court in matters of electoral law. Indeed, it considers that the union that signed, without reservationIn this case, the pre-electoral protocol having obtained a double majority and having presented candidates for the elections without expressing any reservations is not admissible to invoke by way of exception a proportion of men and women composing the electoral body different from that appearing in the pre-electoral protocol (Cass. Soc. 11 December 2019, n°18-20.841, Published in the bulletin).

The position of the Court of Cassation is, moreover, perfectly coherent since the exception of illegality makes it possible above all to prevent a trade union or a CSE from being unfairly harmed by a collective agreement to which it would not have been a party and which it would not have had the opportunity to challenge within the legal period of 2 months.

The Court of Cassation thus provides us with a decision that legally confirms what is simply common sense: it would indeed have been absurd for the CSE to be able to obtain an additional amount of participation that was not provided for in the agreement that it had negotiated and signed without reservation!

Above all, it guarantees a certain legal certainty for employers insofar as the signatories of a collective agreement will no longer be able to challenge its legality at the end of the two-month period; only third parties will be able to do so.

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