Update on the settlement, home/work travel costs and constructive dismissal

Nullity of the settlement agreement concluded with a dismissed employee for lack of reciprocal concessions

In this judgment (Cass.soc., 13 September 2023, n° 21-25.481), an employee with 38 years' seniority was dismissed for gross misconduct on the grounds of insufficient results. The employee was accused in particular of a drop in business, a failure to prospect, a failure to propose an action plan to remedy the situation, and more generally of no longer performing the professional activity for which he was employed.

The employee contested the dismissal and a settlement was reached under which the employee was paid €10,000 in compensation for waiving his right to contest the termination of his employment contract.

However, the employee then argued that the settlement was null and void, on the grounds that it lacked mutual concessions.

The Court of Appeal and then the French Supreme Court ruled in favour of the employee, holding that the grounds set out in the letter of dismissal did not constitute serious misconduct, and deduced that the settlement was therefore null and void for lack of reciprocal concessions, in particular due to the low amount paid.

This decision underlines the extent of the control exercised by the lower courts and the French Supreme Court over a settlement, which in principle has the force of res judicata, and the importance of the care that must be taken in drafting the letter of dismissal, which clearly revealed an inconsistency between the stated reason for dismissal, the facts complained of, and the settlement indemnity paid under a subsequent settlement agreement.

The employer must pay for all transport subscription for the home-work journey, regardless of the employee's place of residence

Articles L. 3261-2 et seq. of the French Labour Code provide that employers must pay at least 50% of the cost of season tickets purchased by their employees for travel between their usual place of residence and their place of work using public transport.

In this case (Paris Court of Appeal, 14 September 2023, n° 22/14610), a company had introduced a geographical distance criterion in a memo to employees, which made possible to exclude employees who usually lived more than 4 hours round trip from their place of work in the Paris region from the reimbursement of public transport costs. The company considered that this difference in treatment was justified by objective and relevant reasons, linked to the fact that some employees decided of their own accord to move away from their place of work.

The CSE and three trade unions took up this issue, which they submitted to the Paris Court of First Instance. In this respect, the Court, confirmed here by the Paris Court of Appeal, censured the employer and ruled that articles L. 3261-2 et seq. do not lay down any geographical criterion governing the reimbursement of transport costs.

The employer was therefore ordered to rectify the employees' claims for reimbursement from the date on which the staff representatives had informed the employer of the irregularity. This ruling confirms a case law from 2020 (Cass.soc., 12 November 2020, n° 19-14.818), in which the French Supreme Court had already ruled that an employee living more than 700 kilometres from his place of work was eligible for reimbursement by the employer of his public transport season ticket.

All facts, even old ones, must be taken into account by the judge in the event of an application for judicial termination/constructive dismissal or the taking of notice of termination of the employment contract

In two rulings handed down on the same day (Cass. soc., 27 September 2023, n° 21-25.973 – n° 21-21.085), the French Supreme Court emphasised that the judge cannot refuse to take into account facts cited by employees who are either seeking judicial termination of their employment contract or constructive dismissal, on the grounds that the facts are too old and/or time-barred.

This allows employees to invoke a wide range of facts. The judge will be obliged to take them into account and decide whether or not the claim is well-founded after analysis, regardless of whether the employee would be barred from making a claim relating to the loss suffered as a result of the employer's breach.

These decisions do not automatically mean that old facts alone justify judicial termination or constructive dismissal, but rather that the judge cannot exclude them from his analysis solely on the grounds of their age. However, a certain amount of vigilance is required.

To be followed!

Authored by Alexandra Tuil and Baptiste Camus.