Employees’ Rights in Case of a Transfer of Undertaking
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.). Employees who enjoy a protected status (e.g. employee representatives) will also see their contracts automatically transferred, with their representative role intact; however, when the transfer concerns only part of a business (a partial activity transfer), their transfer should be authorised by the Labour Inspector.
The contracts will be transferred in their totality (seniority, remuneration, position, non-competition, etc.), as well as unilateral commitments and practices, such as payment of a 13th month premium. The applicable collective bargaining agreement will continue to apply for a maximum period of 15 months, in the event that the company to which the employee is transferred applies a different collective bargaining agreement.
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. In that event, open negotiations should be conducted in good faith to reach a profit sharing agreement, with an obligation to reach an agreement.
Regarding pension rights, the transfer will have no impact on the social security system. However, the transfer of undertaking could require a harmonisation of the complementary system (managed by AGIRC/ARRCO pension funds). The rules of harmonisation depend on how the undertaking is transferred (merger, sale, etc.).
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.