Dual employment is a sensitive subject in French employment law as it enables employees to raise claims against a different employer from that with which the employment contract was signed.
The matrix-type organisation of groups of companies, which has become the rule, can have adverse consequences if employees have the feeling that they are employed by the group as a whole and not by the company to which they are bound under their employment contract).
As long as the economic situation of the employer is flourishing, the risks are remote. However, issues generally arise when the French member company of the group which actually employs the employee shuts down its operations and effects redundancies.
In such circumstances, employees may not benefit from the financial resources available within the group and are tempted to demonstrate that the parent company was also their employer, in order to base a claim that the parent company should be ordered to assume and support the obligations of the subsidiary.
This concept originated approximately 6 years ago and since that time, French employment courts have for the most part accepted such legal recognition. However, they have recently changed their position and a shift in the courts’ decisions can be observed beginning in 2014, leaning toward a restrictive stance of dual employment, the courts considering that dual employment would require a showing of an unusual level of interference of the parent company in the economic and social management of its subsidiary. This interference must go beyond the necessary coordination of economic actions between companies belonging to the same group and the economic domination which can transpire from the usual relationship between a parent company and its subsidiaries.
As an example, in a decision dated 6 July 2016, the Supreme Court decided that a dual employment situation did indeed exist due to a link exceeding the usual cooperation between a subsidiary and its parent company.
In this case, the Supreme Court observed that (i) in the context of reorganization, a certain number of employees of the parent company’s central services (IT, HR and accounting employees) were transferred to another entity of the group, (ii) the recruiting of employees was centralized and the subsidiary company had no power of recruitment, and (iii) the contractual, administrative and financial issues were handled by another company of the group.
French case law regarding dual employment is still changing, and against all odds, a Court of Appeal recently opened a new door to employees, holding that in certain circumstances, even where dual employment cannot be characterized, employees could still bring a tort action in court against the parent company to obtain damages.
Uncertainties regarding dual employment therefore still exist, and extreme control by parent companies over their French subsidiaries is therefore to be avoided.