PSE: the Conseil d’Etat fires a warning shot

On December 19, 2023, the French Conseil d’Etat handed down a number of rulings by the 4th and 1st chambers of the Conseil d’Etat concerning the Plan de Sauvegarde de l’Emploi (PSE):

  • What is the content of the administration’s control of an employer’s compliance with its obligations to protect the physical and mental health of employees, particularly when the identification and treatment of related risks (commonly referred to as “RPS”, for “psychosocial risks”) are included in a majority agreement covering the PSE? (1) ;
  • When restructuring is decided at the level of a Unité Economique et Sociale (UES) and concerns two of its constituent entities, does a joint PSE necessarily have to be drawn up? (2) ;
  • Is there a link between the regularity of the information-consultation procedure of the Social and Economic Committee (CSE) and the consultation of this same body on strategic orientations? If the company ceases trading, is there any need to define professional categories? (3).

 

(1) PSE and RPS (CE, December 19, 2023, 458434)

In this case, the DRIEETS had been asked to validate a PSE drawn up by means of a majority collective agreement, and had requested additional information on the identification of the risks generated by the reorganization and the preventive measures provided for in the PSE.

After receiving this information (and presenting it to the Works Council), the DRIEETS validated the PSE.

The CFDT union and 4 employees appealed to the Paris Administrative Court, which overturned the decision.

The Paris Administrative Court of Appeal then overturned this ruling, confirming the validity of the DRIEETS validation decision.

The same union and employees then lodged an appeal, which was rejected by the Conseil d’Etat, which ruled on two points:

  • As part of its overall control of the regularity of the information and consultation procedure, it is the responsibility of the administration to check that the employer has sent the CSE all the information it needs to enable it to issue its two opinions in full knowledge of the facts, both on the proposed reorganization and on the proposed collective redundancy, in accordance with article L.1233-30 I of the French Labor Code, and in particular the following information:
  • Identifying and assessing the consequences of company reorganization on workers’ health and safety;
  • And, in the presence of such consequences, the actions planned to prevent and protect workers from them, so as to ensure their safety and protect their physical and mental health.

In this respect, the Conseil d’Etat’s ruling specifies that when the majority collective agreement setting the PSE subject to validation covers, among other things, the consequences of the reorganization on workers’ health and safety (provisions which, according to the Conseil d’Etat, are entitled to adopt in view of the contractual freedom deriving from the 6th and 8th paragraphs of the Preamble to the Constitution of October 27, 1946, to which the Preamble to the Constitution of October 4, 1958 refers), then the administration must only verify the regularity of the information provided to the CSE on these elements, and not of its consultation, in application of article L. 1233-30 I cited above.

  • Once it has been established that the reorganization poses health and safety risks, it is also up to the authorities to check whether the employer has taken steps to remedy the situation, and whether these measures correspond to the precise and concrete measures provided for in Articles L.4121-1 and L.4121-2 of the French Labor Code, which, taken as a whole, are suitable for preventing these risks and protecting workers from them.

In this second respect, the Conseil d’Etat specifies that, in assessing whether these requirements are met, the administration must attach particular importance to the fact that such measures are included in the majority agreement setting out the PSE.

In so doing, the High Administrative Jurisdiction encourages employers first to negotiate and then to include in the collective agreement setting out the content of the PSE the observation of RPS and the measures taken to prevent them; the administration’s control over the latter proves to be less “thorough” when these points are thus dealt with by collective agreement (and not unilaterally), focusing more on their existence than on their consistency/relevance.

 

(2) PSE and UES (CE, December 19, 2023, 463794)

In this other case, the DRIEETS had approved the unilateral document setting out the content of the redundancy plan for l’Equipe, a company belonging to the UES L’Equipe, Presse Sport Investissement (known as PSI) and Presse Sports.

The Cergy-Pontoise Administrative Court rejected the request for this decision to be overturned by the ESCU’s Works Council.

In two joint appeals, l’Equipe, PSI and the French Minister for Employment asked the Conseil d’Etat to overturn the decision of the Versailles Administrative Court of Appeal, which, on appeal by the UES works council, had set aside the administrative court’s ruling and, consequently, the decision of the DRIEETS, on the grounds that, since the restructuring had been decided at UES level, the PSE had to be common to both companies concerned.

This reasoning was rejected by the Conseil d’Etat, which held that the existence of a UES did not prevent the reorganization projects of each of the companies, PSI and L’Equipe, motivated, in the case of the former, by early retirement and, in the case of the latter, by the need to safeguard the company’s competitiveness, from being carried out at the same time and giving rise to the drafting of separate unilateral PSE documents specific to each company.

As a result, the legal regime of the PSE in the presence of a UES is as follows:

  • When redundancy plans are decided at the level of a UES, it is at this level – and not at that of the company concerned – that it is necessary to check whether the conditions of headcount and number of redundancies requiring the implementation of a PSE are met (Cass. soc., Nov. 16, 2010, n°09-69.485); in this case, the employer is then required to set up a PSE for the redundant employees (Cass. soc., Nov. 30, 2017, n°15-14.303).
  • The fact that a UES is not a legal entity does not preclude the conclusion of a PSE agreement at this level, even though the UES does not replace the entities that make it up (i.e., each company remains the employer of its own employees). In this case, the agreement must be signed, in addition to by one or more representative employee trade union organizations at UES level, either by each of the companies making up the UES, or by one of them, on the express prior mandate of the said companies (CE, March 2, 2022, n°n°438136).
  • However, this is not an obligation, but only a possibility, with each company – as a legal entity and employer – retaining the right to set up its own PES.

 

(3) PSE and definition of professional categories/strategic orientations (CE, December 19, 2023, n°465656)

First of all, in this ruling, the Conseil d’Etat recalls that :

  • Under article L.1233-57-3 of the French Labour Code, in the absence of a collective agreement, the administration approves the unilateral document drawn up by the employer, after verifying that its content complies with legislative provisions and contractual stipulations relating to the items mentioned in 1° to 5° of article L.1233-24-2, 4° of which concerns the number of job cuts and the occupational categories concerned;
  • The definition of such categories is only relevant if the employer has to choose between the employees to be made redundant, and this is not the case when all the jobs in a company are eliminated due to the total and definitive cessation of the company’s activity.

Thus, in the case in point, since the company’s plan to cease trading completely and definitively led to the elimination of all 208 jobs at its sole site, it could not be argued that the DRIEETS’ approval decision was vitiated by illegality on the grounds that the occupational categories chosen by the employer had not been defined in the unilateral PSE document.

Next, the High Administrative Jurisdiction specifies that – this time with regard to the control of the regularity of the information and consultation procedure of the CSE, and after having noted that the Chartered Accountant mainly criticized the employer for not having communicated to him information on the strategic orientations of the company – the information and consultation procedure of the CSE on the said orientations, which falls under the jurisdiction of the courts, is distinct from the procedure for informing and consulting this body in the context of a plan for collective redundancies for economic reasons involving the adoption of a PSE, and has no bearing on the legality of the latter.

This independence between consultation on strategic orientations and ad hoc consultation on changes to the company’s economic or legal organization, or in the event of restructuring and downsizing, has already been confirmed by the French Supreme Court’s Social Division (Cass. soc. September 21, 2022, no. 20-23.660).

 

(4) PSE and article L.1224-1 of the French Labor Code (CE, December 19, 2023, n°467283)

As a reminder, article L.1224-1 of the French Labor Code stipulates that employment contracts in force on the date of a change in the legal status of the employer continue to exist between the new employer and the company’s personnel.

In this case, the FO trade union argued that the employees of the company whose activities had been transferred to other group companies should have had their employment contracts taken over by these different entities on the basis of the provisions of this article, and that the administration had failed to exercise its control on this point.

On appeal, this argument was rejected, on the grounds that it is not for the administration, when examining the request for approval, to assess the necessity, legality or appropriateness of implementing article L. 1224-1 of the French Labor Code, even though the application of these provisions would be likely to reduce the number of redundancies resulting from the PSE.

In its ruling, the Conseil d’Etat confirms the analysis of the Versailles Administrative Court of Appeal, and decides that it is not the responsibility of the administrative authority, when ruling on an application for approval of a unilateral document relating to the employment protection plan, to verify the correct application of the aforementioned article L. 1224-1. Accordingly, the argument that it has been disregarded is inoperative in support of the challenge to the DRIEETS approval decision.

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