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The redundancy letter which only mentions the economic difficulties or the reorganisation required by the necessity to safeguard competitiveness is considered valid.

In a case dated May 3, 2016, the French Supreme Court (Cass. soc., 3 mai 2016, n°15-11.046) held valid a redundancy letter which states that the redundancy is based on the elimination of the employee’s position resulting from the reorganisation of the company justified by economic difficulties and (or) the necessity to safeguard competitiveness, without referring to the level on which the economic rationale was assessed.

The employee at stake, made redundant, challenged his redundancy letter. Based on the fact that his employer company belonged to an international group, the employee argued that the redundancy letter should have mentioned or referred to the economic difficulties of the group’s business sector, since French law provides that the economic rationale should be assessed at the level of the group’s business sector. As the redundancy letter sets the limits of the dispute, lacking such mention, the redundancy should have been held unfair for lack of motivation.

The Supreme Court did not follow this reasoning. It rather held that it was only in case of litigation that the existence of the economic rationale would be assessed. It then endorsed the redundancy letter which merely justified the elimination of the employee’s sales position by a reorganisation of the company aiming at safeguarding the company’s competitiveness and trying to ensure its sustainability and which described at length the economic difficulties of the company without any reference to the economic difficulties of the group’s business sector. If this case seems, at first sight, to loosen the motivation requirement in case of redundancy, it actually only postpones the moment when the employer will need to demonstrate the existence of an economic rationale at the level of the group’s business sector.

It is actually for the judge to appreciate the validity of the rationale on which the redundancy is based at group level or at the level of the group’s relevant business sector, as confirmed by the French Supreme Court in a case also dated May 3, 2016 (Cass. soc., 3 mai 2016, n°14-29.700), in line with a case issued on November 4, 2015 (Cass. soc., 4 novembre 2015, n°14-18.140).

As a consequence, if an employer can postpone the moment when it should demonstrate the existence of an economic rationale at the level of the group’s relevant business sector, by only referring to the economic rational in the redundancy letter, it could not be exempted from such demonstration in case of litigation (nor obviously, beforehand, when consulting the employee representatives, if required).