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Employee Rights When an Undertaking is Transferred in France

1. Employees’ Rights

a. Scope of the automatic transfer

In France, an employee cannot object to a transfer of undertaking as the transfer is operated automatically.

A refusal could constitute grounds for dismissal for disciplinary reasons.

The automatic transfer concerns any kind of employment contract (fixed-term contracts, trial period contracts, suspended contracts for illness, etc.).

The contracts will be transferred in their totality (seniority, remuneration, position, non- competition, etc.), as well as unilateral commitments and practices.

b. Employees’ benefits and pension rights

Employees will continue to benefit from any existing profit sharing agreement unless the change in legal status of the employer makes the implementation impossible for the transferee.

Regarding pension rights, the transfer will have no impact on the social security system.

c. Information procedure

To date, there is no legal requirement in France to inform each employee before the transfer, but there is a legal requirement to inform and consult the Works Council. However, in practice, employees commonly receive a brief letter advising of the change of employer, in an attempt to achieve a seamless transition and to build unity with the new entity.

2. Requirements for Predecessor and Successor Parties

The employer who fails to respect this information obligation risks a fine of up to 2% of the amount of the sale.

The successor has the obligation to maintain the transferred employees work contract and working relationship (i.e. company agreements, company benefits, etc.). Any modification will entail the agreement of the employee or a negotiation with the employee’s representatives, as the case may be.

For more information on these articles or any other issues involving labour and employment matters in France, please contact Joël Grangé, Partner at Flichy Grangé Avocats (www.flichygrange.com) at grange@flichy.com
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