Social

REDUNDANCIES : PAY ATTENTION TO THE CONCEPT OF BUSINESS SECTOR

29 Novembre 2024 When economic redundancies are envisaged in a company belonging to a group, the economic reason must be assessed, not at company level, but at the level of the sector of activity common to the other entities of the group located on national territory (C. trav., art. L. 1233-3). A decision handed down on 8 November by the Conseil d'État (Conseil d'État, Combined Chambers, Decision no. 469696 of 8 November 2024, Application no. 24-566 bis) specifies that the specialisation of a company is not sufficient to exclude its inclusion in a wider sector of activity.

1. The facts:

  As part of a reorganisation necessary to safeguard its competitiveness, a group decided to close one of its sites and drew up a PSE. After verifying the circumstances of the termination, the labour inspector approved the decision. However, a dispute arose over the sector of activity used by the employer and the authorities to assess the economic reason for the redundancy. The group was structured into three distinct business segments: prescription dermatology, aesthetic and corrective dermatology, and cosmetic dermatology for the general public. As the company specialised in prescription dermatology, the employer and the labour inspector considered it appropriate to assess the economic reason for the redundancy on the basis of this sector alone, which the employee contested.

2. The decision

The labour inspector cannot confine himself to the sector of activity in which the company specialises in order to assess whether the economic reason is well-founded. He must assess the situation of all the companies in the group operating in the same sector of activity, characterised in particular by the nature of the products, goods or services supplied, the target clientele, and the distribution networks and methods, relating to the same market (C. trav., art. L. 1233-3). The Conseil d'État applied the aforementioned principles to the circumstances of the case. It noted that : - the company operated in the group's three business segments ; - the products of the three sectors were indistinctly designed, manufactured and distributed by the same divisions of the group; - the Group pursued a development strategy common to all three segments. All of these factors made it possible to conclude that ‘the relevant sector of activity [in this case] was the one made up of the three aforementioned segments’, and not the one limited to prescriptions, contrary to what the employer and the labour inspector had maintained. As the employer did not provide any evidence enabling it to assess the reality of the economic motive on this scale, even though it had been specifically invited to do so, the employee was ‘entitled to maintain that the reality of the economic motive on which her dismissal was based [was] not established and that the labour inspector's decision authorising her dismissal on economic grounds [was], as a result, vitiated by illegality’, the judgment concludes. Conclusion : prior to any collective redundancy within a group, it is essential to determine the sector of activity. It is understood very broadly by the judges.