News

THE TERMINATION WITH NOTICE FOR ECONOMICAL REASONS: various decisions dated 15th december 2011:

If case law is of the opinion that the employer is solely responsible of the risk of his firm, he has on the other side the power of direction. Further to case law, the employer is deciding as such the economical policy of the firm, its internal organization and the technical modalities of functioning, which he may amend on a discretionary basis from time to time. In a court order dated 7 June 2007 (number 31893) the court has ruled that a judge can in no way be substituted to an employer in the appraisal of the opportunity of the undertaken measures  and the employer can as such undertake any measure of reorganization or restructuring he deems approporiate and proceed to a termination with notice based on the requirements of functioning of the firm, except if the dismissed person can establish that his/her dismissal is without any relation to this measure and was only advanced by the employer as false pretends.

In a court order of 30 March 2000 (number 23600), it has been ruled that one can not require from an employer to wait that the financial situation of the firm has completely collapsed before reacting and as such he is authorized to undertake any measures of restructuring, reducing the functioning costs and as such proceed even to dismissals. By order of 22 June 2000 it has been decided that an employer is always authorized to organize its firm in the most rational manner and this not only in case of a threat of huge losses. A judge is not entitled to control the opportunity of the reorganization measures undertaken by the employer pursuant to his power of direction. Several recent decisions of the court of appeal of 15 December 2011 (for example 35834) have underlined the concept of dismissal for economical reasons. The court of appeal refers first of all to a decision rendered by the French “Cour de Cassation” on 26 February 1992 stating that the cause of dismissal, meaning the alleged financial difficulties, has to be appreciated at the date of termination of the employment relationship. The difficulties can not be solely based on projections, even if those projections will be confirmed later on. The court of appeal recalls that this principle has been set in a court order of the Luxembourg “Cour de Cassation” on 10 February 2011 (number 2820) precising that it is at the date of the notification of the termination that the cause of the dismissal has to be appreciated and consequently that it is on this date that the economical difficulties of the employer must be assessed.

As such, a dismissal for economical reasons is not valid if the grounds were only based on bad projections as moreover those projections were not realized. The Court emphasized that the fact that the projections have not been realized proves that projection can not be fully trusted and there is always a possibility that further work is coming in. As such, a dismissal only based on bad projections is wrongful.

This court order also confirms that a priority demand for employment in the sense of article L.129-9 of the labour code is premature if this request has been introduced prior to the end of the termination period.

In a further court order of the same day (15 December 2011, number 36385), a dismissal for economical reasons has been declared wrongful as the employer advanced at the same time economical reasons and personal reasons. The employer advanced that the personal grounds have determined the choice to dismiss this person and not an other employee of the firm, precising however that the dismissal was only based on economical considerations. The Court decided that the choice of the person to be dismissed for economical reason can only be based on objective and easy testable criteria. If a criteria like the one to dismiss a full working employee can not be rejected at once, the one used by the employer referring to the open disapproval of the employee clearly shows that the employer wanted to dismiss an employee who was no longer motivated and disposed to put all his energy into the good execution of the tasks. The Court ruled that if an employer reproaches to an employee his behavior of open disapproval towards the direction, he is obliged to explain this clearly. An employer cannot mix up reasons related to the necessities of functioning of the firm and otherwise refer to the behavior of the employee. This amalgam will have as consequence a streaming together of reasons excluding themselves mutually and rendering as such the motivation, on which the dismissal is based, imprecise.

The court of appeal as a consequence confirmed the order rendered by the court of first instance and declared the dismissal as wrongful.

Christian JUNGERS

Partner

Downloadable files attached to this article
- kckg_newsletter_cju_20120202.pdf (23.74 KB)