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Sign-On Bonuses | Workload and work/life balance | Expert's role in CSE consultation on company's financial health

Published on : 04/07/2023 04 July Jul 07 2023
Newsletter / Recent Case Law
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« Golden hello » sign-on bonuses : the employer can impose partial reimbursement in case of resignation before the agreed date 

« Golden hello » sign-on bonuses are a common practice in certain industries such as the banking and financial sector and aim to attract talents and/or compensate medium or long-term bonuses forfeited by employees when leaving their previous employer. These bonuses are also a way to retain employees. The French Supreme Court, in a recent ruling, granted them full effectivity.

Until this ruling, the French Supreme Court had systematically considered that compensation automatically accrued based on time worked and that it could not be subject to a condition based on being present within the company beyond the date of such accrual. Moreover, the Court considered that deferred compensation, such as making the payment of an end-of-year bonus dependent on employees being still employed on June 30th of the following year, was a breach of employees’ freedom to engage in work and to pursue a freely chosen or accepted occupation.

In this recent ruling, the French Supreme Court stated that this type of clause does constitute a limitation of employees’ freedom but that such limitation was neither unjustified nor disproportionate. 2 conditions mut be met: the bonus must be distinct from the employee’s normal compensation and its objective must be to retain an employee with which the employer seeks a long-term relationship. However, the Court appears to exclude the possibility for an employer to seek the full reimbursement of the sign-on bonus. 

As a result :

• Seek advice before drafting « golden hello » sign on clauses
• Review existing clauses to ensure compliance with this recent case law 

Employers who do not discuss workload and work/life balance issues during annual employee performance reviews can be considered in breach of their duty of care 

Employers have a duty of care toward their employees with regards their physical and/or mental health. This include taking necessary measures to avoid or reduce health and safety risks which could result from excessive workloads.

In this recent case, the French Supreme Court stated that such measures included informing and training employees on these health and safety risks as well implementing annual employee performance review meetings during which workload and work/life balance issues could be discussed. 

By not doing so, the employer, who had been alerted on numerous occasions by the employee in question of his excessive workload and ensuing mental stress, was considered to have breached his duty of care. 

Should a work-related accident or illness be deemed to be caused in part or in whole by the employer’s breach of their duty of care, defined under French law as an “inexcusable fault” (faute inexcusable), this can result in claims for constructive dismissal and damages by the victims, increase in social security contributions and criminal fines and, in the most serious cases, imprisonment. An “inexcusable fault” is automatically deemed to exist when an employee or staff representative has alerted the employer of the existence of this risk.

So :  

• Implement at exact time annual performance reviews during which workload and work/life balance issues are discussed;
• Document the fact that such issues were discussed and, if any issues are raised by employees, the company’s response and measures taken.

Scope of the mission of the expert appointed by the CSE during the consultation on the economic and financial situation of the company.

In a decision dated June 1, 2023, the French Supreme Court (Cour de Cassation) clarified the mission of the expert appointed by the Social and Economic Committee (CSE) during its consultation on the economic and financial situation of the company.

His mission may concern :

• the situation and role of this company within a group, which means that he can request access to information at group level, even abroad;
• but is limited to the year in question and the two preceding years, thus limiting the experts' desire to obtain information on the previous 5 years, which was often the case.

Consequently, the employer may request a reduction in the fees of an expert who wishes to examine a period longer than the three years retained by the French Supreme Court.

Furthermore, the company considered that the expert's mandate should be limited to the analysis of the economic and financial situation of the company alone, without extending it to the group to which it belongs. The French Supreme Court disagreed with the employer : the CSE expert must have access to the same documents as the company's statutory auditor, who may extend his investigation to all the companies of the group to which the company belongs.This authorizes the expert to request documents from other companies in the group to which the company belongs.
 
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