Termination of contract and notice period – clarifications from the Cour de cassation

A recent ruling by the French Supreme Court (Cour de cassation) provides an opportunity to review the consequences of an employee taking formal notice of the termination of his employment contract. It should be remembered that “prise d’acte” is a method of terminating a contract recognized by case law, but for which no procedure is provided by law, whereby an employee, blaming his employer for wrongdoing, can initiate the termination of his contract in order to hold the employer responsible. In this case, the employee’s departure from the company is immediate, as he considers that the grievances against the employer preclude the execution of any notice period.

However, this type of termination is a double-edged sword, since the judge must assess the seriousness of the employee’s misconduct against the employer, in order to reclassify the termination as a dismissal without real and serious cause if the misconduct is sufficiently serious, or, on the contrary, reclassify it as a resignation and award the employee nothing.

In the first case, the employer will have to compensate the employee for the consequences of the termination of the employment contract to his detriment: compensation in lieu of notice, redundancy pay and compensation for dismissal without real and serious cause on the basis of Articles L. 1235-3 and L. 1235-5 of the French Labour Code, which will be calculated according to the employee’s seniority and the size of the company, in addition to any damages awarded. Translated with DeepL.com (free version)

The question of compensation in lieu of notice raises a number of issues: what happens if the employee has already served all or part of the notice period, and has therefore been paid for doing so?

The Court of Cassation responded in a recent ruling (Cass Soc. January 24, 2024, no. 22-19.890):

In this case, while employed as an engineer, Mr X had been working for company Y for over 20 years when he resigned. During the period of notice worked and paid for, he reproached his employer for a number of breaches which had led to his decision to terminate his employment contract. He lodged an application with the Labor Relations Court, requesting that his resignation be requalified as a termination of his employment contract, and that the termination of his employment contract have the effect of a dismissal without real and serious cause.

The lower courts, reclassifying the resignation as a termination with the effects of a dismissal without real and serious cause, ordered the employer to pay certain sums, including compensation in lieu of notice corresponding to the agreed period of notice, i.e. three months’ salary.

However, the employer, taking the view that the employee was not entitled to compensation in lieu of notice even though he had served his notice period (at least in part), appealed to the French Supreme Court.

If the French Labor Code (article L 1234-5) stipulates that the employee is entitled to compensation in lieu of notice (except in the case of serious misconduct), what happens if the employee has served even part of the notice period?

The Court’s response: it agreed with the employer that the employee could not receive full compensation in lieu of notice if part of the notice period had been worked.

This ruling, while not illustrating a new position by the Cour de cassation (see Cass. soc, January 21, 2015, no. 13-16.896, Cass Soc. November 23, 2017, no. 16-15. 939), sheds light on the consequences of the termination of employment with regard to compensation in lieu of notice, whereas the situation is different if it is the employer who exempts the employee from performing the notice period: in this situation, the employer is liable to pay compensation in lieu of notice, since the termination of the contract produces the effects of a dismissal without real and serious cause, even if the employee had, at his or her request, been exempted by the employer from serving notice (Cass. Soc. September 26, 2012, no. 10-28.262).

But what if the judges consider the employee’s grievances unfounded and the employer’s breaches insufficiently serious? In this case, the “prise d’acte” will have the same effect as a resignation.

An employee who resigns owes his employer a notice period. Is this also the case if the termination is reclassified as a resignation?

Yes, in this case, the employee is liable for compensation corresponding to the notice period not served, if the employer requests payment (Cass. Soc. June 8, 2011, no. 09-43.208.). ) The employee may then, as a precaution, serve a notice period, but no compensation in lieu of notice may be payable if the employee was unable to serve the notice period due to incapacity, notably illness (Cass. Soc. November 24, 2021, no. 20-13.502).