In a decision of 17 October 2018, the French Supreme Court held that in the event of a transfer of a business and unlike customary practices and unilateral undertakings, which are transferred, the in-house regulations are not. The employer may not impose any sanctions against an employee on the basis of the hitherto applicable in-house regulations.
Following a company spin-off, one of the business of a company was transferred to a newly created company, which took over the employees assigned to this business as a result of the legal transfer of employment contracts (Article 1224-1 of the French Labour Code Labour).
The new company decided to continue to apply the in-house regulations that applied to employees before the transfer.
The company argued that in the event of a transfer, the in-house regulations are, like customary practices and unilateral undertakings, automatically transferred to the new employer, who then must apply them. In the context of disciplinary proceedings, the new employer had thus relied on the provisions of those in-house regulations to impose a sanction on an employee.
A trade union brought an action before the judge to suspend the application of the internal rules until the legal formalities for amending or adopting new in-house regulations have been completed. This action eventually proved a success.