Undertaking Agreement In French
French case law considers that workers assigned to the delegated undertaking are not allowed to continue working for contempt if the conditions for the transition of an undertaking are met. Their only possibilities are either to resign or to work for the buyer. Any refusal to work for the buyer may justify dismissal for breach of disciplinary obligations (i.e. misconduct). In the absence of such a provision, the general rules described above should apply depending on how such a system has been set up (by company collective agreement or unilateral commitment of the employer). If the acquirer carries on another activity, there is no transfer of business. For example, in one case where a commercial lease had been transferred, the Supreme Court ruled that the workers did not need to be transferred, with the assignor selling fabrics while the buyer sold clothing (Empl. Supreme Court of 9 May 1989, #85-43.623). In summary, the main characteristics of the French legislation on business transfers are as follows: in addition to the situations of transfer of assets expressly mentioned in the relevant provision of the French Labour Code (succession, sale of a company, merger or creation of a business), the concept of “transfer of an enterprise” has been taken into account by the French Supreme Court (Court of Justice) in similar situations. According to case law, a company that is next to the main activity can “pursue its own objective”. The outsourcing of support services can therefore raise a business transfer issue when a given team is assigned to the relevant support activity, with its own employees being fully dedicated to that activity and its own superiors, equipment and objectives. Thus, the French Supreme Court ruled that outsourcing computer-based telephone support to a service provider was a transfer of the business, given that “this division had specific resources in terms of personnel and equipment and tended to have its own objectives and results” (Empl.
Div. Supreme Court, 23 January 2002, #02-17.642). If the transferred company is managed in a totally different way by the buyer (i.e. different manufacturing, distribution and management processes), there is no transfer of business under French law. In a situation where the sale of cars of a given brand has moved from one retailer to several dealers, the French Supreme Court has ruled that changing the way the company is run for the sale of those vehicles precludes any transfer of the business (Empl. . . .