The signature of an agreement providing for the implementation of a PSE

The signature of an agreement providing for the implementation of a PSE concluded by a managing director who does not have the power to do so may be regularised during the course of the procedure with retroactive effect   Conseil d’État, 3 April 2024, no. 465582. There is no doubt that the validity of PSEs is subject to complex and demanding legislation for companies, and is therefore likely to generate practical difficulties and challenges for them. A recent decision by the Conseil d’Etat, dated 3 April, sheds new light on the rules governing PES, and more specifically on the possibility of regularising an agreement signed by a person not initially authorised to do so. Let’s start by reviewing the circumstances that led to this ruling. Three years ago, the French Football Federation (FFF) was considering restructuring for economic reasons, with the aim of cutting 22 jobs. It was against this backdrop that a job-saving plan was put in place by way of a majority agreement signed on 13 July 2021 between the federation’s managing director and the union delegate representing the Syndicat national des administratifs et assimilés du football-CFDT. In a decision dated 16 July 2021, the DIRECCTE validated this agreement. Nine employees then applied to the Paris Administrative Court to have this decision annulled, arguing that the Managing Director did not have the authority to sign such a collective agreement. In a ruling dated 10 December 2021, the Court annulled the DIRECCTE’s decision on this basis. The FFF appealed to the Paris Administrative Court of Appeal (CAA), and in the meantime regularised the situation by having the agreement ratified by the Executive Committee on the following 27 January (i.e. more than 6 months after the signing of the disputed agreement). On 6 May 2022, the Paris CAA overturned the ruling handed down by the Paris Administrative Court. The employees then appealed to the Conseil d’État.

• The applicants’ main argument was that the Managing Director did not have the power to conclude the collective agreement constituting the PSE.

  In this respect, they pointed out that the FFF’s financial regulations stipulate that ‘the Executive Committee has management powers and is responsible for the administration of the Federation’ and that ‘The General Manager is responsible for personnel management in accordance with the budget prepared in consultation with the General Treasurer and approved by the Federal Assembly. In this capacity, he manages all the Federation’s staff. He has full authority to recruit, dismiss and define salary policy’. The Articles of Association also stipulate that ‘the Chief Executive Officer is delegated general authority to sign all documents relating to the day-to-day running of the Federation, with the exception of commitments with contractual value exceeding an amount set by the Executive Committee’. According to a COMEX minutes of 7 September 2017, the Chief Executive could only contractually commit the FFF up to €300,000. Beyond that, the authorisation of the Executive Committee is required. As the cost of the PSE was estimated at 2.8 million, such authorization was necessarily required in this case, which the General Manager had not requested before signing the collective agreement. However, this argument did not convince the Paris CAA, which noted that, while only the FFF Executive Committee was empowered to authorize commitments with contractual value in excess of an amount it set, in a decision dated September 7, 2017, at 300,000 euros, this same committee had, in a deliberation dated January 27, 2022, expressly ratified the majority agreement setting the cost of the PSE. It thus accepts the validity of the adjustment made by the FFF on that date. The Conseil d’Etat ruled that the Paris CAA had not committed any error of law, basing its decision on the provisions of the French Labor Code concerning the implementation of a PSE in companies with at least 50 employees, and on the provisions of the French Civil Code concerning the conditions of validity of contracts and the obligations of the principal. The Conseil de l’Etat considers – and this is where the main contribution of this ruling lies – that the signature, on behalf of the employer, of a majority collective agreement concerning the PSE, by a principal, beyond the power given to him, may be regularized with retroactive effect by express or tacit ratification of the agreement by the authorized body, even when this ratification takes place after the administrative authority’s decision validating the same agreement, provided that the statutory rules of the employer legal entity do not prevent this. In this case, the statutory provisions governing the distribution of powers within the FFF did not stand in the way of such a regularization, so that the latter appeared perfectly valid. The pragmatism shown by the Conseil d’Etat can only be commended. This decision – although adopted in a particular context, since the case involved a federation with the status of an association governed by the law of July 1^st, 1901 – should be applicable to private-law companies, which may also be faced with the same problem as the FFF when, for example, it is the HR director (or CFO) who signs the majority agreement in the context of a redundancy plan, and it turns out that the latter has no standing to act in this respect.

• The plaintiffs also claimed that the procedure for informing and consulting the CSE was irregular.

  They considered that the CSE had not been provided with useful information on the real economic reason for the reorganization, given that the letters sent to employees after the PSE had been approved, informing them of the terms and conditions for signing up to a Contrat de Securisation Professionnelle (CSP), had referred to a different economic reason (i.e. safeguarding competitiveness) than the one given in the documents sent to it, which referred to the federation’s economic and financial difficulties. Following the CAA’s lead, the Conseil d’Etat ruled that this argument was completely inoperative, as such a circumstance was not such as to establish that the procedure had been flawed. And for good reason: it appeared that the federation had never sought to mislead the CSE, either by concealing certain elements or by falsifying data. The CSE consultation procedure was therefore perfectly legal. The High Court’s position on the two issues raised by the plaintiffs thus ensures the security of the PSE, which is an excellent thing, especially as the implementation of such a procedure is particularly onerous for the employer.