The Court of Cassation rules for the first time on the formalism of the tripartite intra-group transfer agreement

(Cass. Soc. October 26, 2022, n°21-10.495, Published in the Bulletin)

Intra-group transfers are not specifically provided for by the Labor Code, even though they can be numerous in groups, and thus represent a major challenge for HR.

In practice, and in the silence of the law, these take the form of a tripartite agreement signed between the employee and his two successive employers which generally provides for :

  • the end of the initial employment contract with the first employer;
  • the conclusion of an employment contract with the new employer.

While the Court of Cassation has already implicitly accepted the legality of these agreements – by considering that the provisions relating to the termination of employment agreement are not applicable to a tripartite agreement concluded between an employee and his two successive employers – it had never had the opportunity to rule on the formalism of these agreements (Cass. Soc. June 8, 2016, No. 15-17.555; Cass. Soc. November 17, 2021, n°10-13.851).

This has now been done, since in a widely published decision of October 26, the Social Division of the Court of Cassation ruled that, in order to be valid, the tripartite agreement :

  • must be formalized in writing;
  • and contain the agreement of the first employer, the agreement of the substitute employer and the express agreement of the employee.

The mere meeting of consents, as was the case in the facts that gave rise to this decision, is therefore not sufficient to characterize the existence of such an agreement.

***

In this case, an employee had been transferred to another entity of the same group, without the initial contract being terminated and without any specific agreement being concluded. The transfer – requested by the employee herself – was made by mutual agreement between the parties.

According to the Court of Cassation, the Amiens Court of Appeal was therefore wrong to consider that these circumstances characterized the existence of a tripartite agreement formalizing the employee’s transfer.

With this decision, the Court of Cassation finally clarifies the expected formalism of the tripartite agreement.

Although this decision is welcome, given the legal uncertainty that existed until then, we can nevertheless regret a certain rigidity on the part of the High Court insofar as the facts of the case showed a common desire on the part of the employers and the employee that the latter be transferred to another entity of the group, even though they had not concluded an agreement.

The drafting of an agreement, in these circumstances, could legitimately appear superfluous.

In any case, this decision calls for vigilance on the part of employers in the event of an employee transfer: it will be necessary to take the necessary steps to establish a tripartite agreement that must be signed by :

  • the transferred employee,
  • the first employer,
  • and the host society.

If this is not the case, the first contract cannot be considered as having been validly terminated and the employee may request reinstatement, or, failing that, the compensation inherent in dismissals without real and serious cause.

As for the principle of loyalty, which must govern any employment relationship, once again it is disregarded here since it concerned the employee…

***

This being the case, it should be noted that the Court of Cassation, anxious to preserve contractual freedom, does not require that the tripartite agreement contain any other mention than that of the agreement of the parties to the transfer.

It is therefore not at all necessary, as the Poitiers Court of Appeal may have ruled, for the tripartite agreement to contain provisions such as :

  • the transferred contract clauses,
  • the recovery of seniority,
  • the fate of debts incurred by the former employer,
  • the paid leave system,
  • the determination of the applicable collective status (Poitiers Court of Appeal, January 17, 2018, No. 16/03795).

However, the parties are free to include additional clauses to specify the contours and terms of the transfer. The Court of Appeal of Poitiers has given some examples of optional clauses:

  • implementation of a reflection period with the option of withdrawal by the various parties,
  • time-limited probationary period coupled with a right to return to the original company,
  • the future of pension plans.

In this case, particular attention must be paid to the drafting of these clauses to avoid any pitfalls.

We are of course at your disposal to assist you in the drafting of such agreements.

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