The “autonomous” tripartite agreement in cases of intra-group transfer is now established by the French Supreme Court

In a decision dated October 15th 2014 (No. 11-22251), the Supreme Court seemed to radically exclude any mode of amicable termination of employment other than the mutual termination agreement (“rupture conventionnelle homologuée”) provided by Article L. 1237-11 and seq. of the French Labour Code.

This decision caused much confusion regarding intra-group transfers. Often, for such transfers, only one agreement was concluded between the employee and his two successive employers. This agreement would organize the termination of the first employment contract and the transfer of the employee, without compensation or specific procedure. In such a case, the length of service of the employee would be maintained. Taking into consideration the October 15th 2014 decision, the validity of such agreements was potentially exposed to judicial challenge.

In a decision of June 8th 2016 (No. 15-17555), the Supreme Court clearly answered the question and removed any doubt. Indeed, it now considers that “the provisions of Article L. 1237-11 of the French Labour Code related to the mutual termination agreement (“rupture conventionnelle homologuée”) between an employee and his employer are not applicable to a tripartite agreement between an employee and two successive employers which aims at organizing, not the termination, but the continuation of the employment contract”.

This decision establishes the practice of concluding an autonomous tripartite agreement in case of intra-group transfer (i.e. without specific procedure, form or severance payment). It goes even further as it seems to prohibit the signature of a mutual termination agreement (“rupture conventionnelle homologuée”) in such a case.

Nevertheless, it does not provide all the details that we dearly expected. It does not indeed specify the clauses to be included in a tripartite agreement (obligation or not to maintain the length of service, the opportunity or possibility to provide for a trial period in the second employment contract, etc…). Also, it does not legally qualify the tripartite agreement.

Until now, many authors advocated resorting to the legal concept of contract novation, especially in order to avoid the application of the October 15th 2014 decision on the termination of the employment contract. However, as noted by Mrs. Fanélie Ducloz, Member of the Supreme Court and advocate of the decision of 8 June 2016, the French Civil Code does not currently provide for the novation of contracts, only for the novation of contractual obligations (Article 1271 and seq. of the French civil Code). Thus, she raises the question of whether the tripartite transfer agreement would not better respond to the concept of transfer of the contract now provided for by the new Article 1216 of the French Civil Code which will enter into force on October 1st 2016. Indeed, this article provides that “a contractor, the transferor, may transfer his quality of contractor to a third party, the transferee, with the agreement of the other party, the transferred”. In such case, the issue of terminating the initial employment contract would no longer be a problem, no more than the issue regarding the length of service (which would be maintained) or trial period (which cannot be provided). If this reference is confirmed by the Supreme Court, it can be considered that the transfer of the employment contract could intervene in all transfer hypotheses, without being limited to intra-group transfers.