Since December 1, 2016, Article L. 1233-3 of the French Labor Code has set out objective criteria enabling companies to demonstrate whether economic difficulties are such as to justify redundancy.<\/p>
Economic difficulties can be characterized by a significant change in at least one economic indicator, such as a decline in orders or turnover, operating losses, or a deterioration in cash flow or gross operating surplus.<\/p>
However, law states that economic difficulties may also be justified by any other factor that could justify them.<\/p>
Thus, in a Court of Appeal ruling, the judges did not ground their decision on the economic indicators expressly listed in the Labor Code, but on other factors that could characterize economic difficulties:<\/p>
In conclusion, the Court of Appeal ruled that the economic difficulties that led to the termination of the employee’s employment contract in January 2021 were demonstrated.<\/p>
In a ruling dated September 17, 2025, the Court of Cassation upheld the reasoning of the Court of Appeal and reiterated that, in accordance with Article L. 1233-3 of the Labor Code, the judge may assess the reality of the economic difficulties without necessarily relying on economic indicators relating to a decline in turnover or orders, or operating losses. The judge may indeed take into account other factors that characterize these difficulties.<\/p>