Can a drop in turnover justify redundancy?
Labour Law
Source: Supreme Court, Social Chamber, April 16th 2015, n°14-10551
The article L.1233-3 of the labour code gives the definition of the economic reasons allowing an employee's redundancy.
Thus, it outlines: «Constitutes a lay-off for economic reasons the lay-off made by an employer for one or several reasons, other than individual motives, resulting from job-cut, change in the job, or modification, refused by the employee, of an essential part of the contract of employment, subsequent in particular to economic difficulties or technologic changes»
Therefore, the employer has to prove real economic difficulties.
In this law case, the Supreme Court had to discuss on the matter whether a drop in turnover of a company was enough to justify the financial difficulties of the company, and therefore justified the employee's redundancy.
It was about an employee who was hired as a salesperson by the owner of a tobacconist's shop, who was made redundant when the owner changed.
The employee had disputed the real and serious cause of her lay-off and the Court of Appeal of Colmar, on November 14th 2013, gave her reason.
The employer made an appeal to the Supreme Court, explaining that the continuous drop in turnover, over several years, proved the economic difficulties and beyond, the employee's redundancy.
The Supreme Court did not follow this argumentation as it confirmed the decision previously rendered, indicating that the Court of Appeal had indeed noticed that the turnover of the company was fluctuating from 2008 to 2010, but was still in profit, and had only taken into consideration that making a lower profit the year before the redundancy was not enough to prove financial difficulties pleaded, and therefore deducted that the redundancy had no real and serious cause.
The employer has therefore been sentenced to pay damages to the employee, her lay-off having been renamed into unfair dismissal.
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