The legal background
In the context of an economic dismissal, even when the employer claims to have strong economic grounds for justifying the termination of the employment contracts, it is still required to comply with the general reclassification obligation applicable to all economic dismissal procedures.
Such obligation consists in trying to seek alternative positions to be proposed to the employees whose dismissal is contemplated prior to the notification of the dismissal and must be conducted both at the company and group level. In addition, the positions offered as part of the reclassification obligation must be formalised in writing, and be sufficiently precise and personalised (as opposed to the simple posting of the available position in the company’s premises). In this respect, case law requires that the offers proposed to the employees contain in particular the location, a description of the duties to be performed, the level of remuneration and the corresponding classification.
In practice, companies tend to provide that the reclassification offers must be agreed by the manager responsible for the position concerned after the acceptance of such offer by the employee. In light of the above, is such provision compliant with the reclassification obligation of the employer?
The facts and the decision
In a recent decision of the Supreme Court dated 28th January 2015, the reclassification offers communicated by a company to its employees subject to an economic dismissal procedure specified that the potential hiring would have to be agreed by both the Head of recruitment and the manager responsible for the service concerned. Following their dismissals, and after having refused the reclassification posts offered to them, some of the employees terminated filed an action for unfair dismissal with the employment tribunal. The Supreme Court upheld the conclusions of the Court of Appeal and ruled that the offers in the present case were not sufficiently firm and did not ensure the actual reclassification of the employees in the event a position became available. Therefore, the dismissal of the employees was deemed to be unfair and the payment of damages was awarded to them as a result.
This decision should not come as a surprise to companies as it is consistent with the purpose and context of the reclassification obligation, which requires that such process be conducted fairly. Hence the requirement that any proposal of reclassification is expressed on a firm basis with no conditions or uncertainties. This ruling may also be viewed as an application of a previous decision which found that the stipulation of a probationary period in the reclassification post proposed to the employees was not compliant with the employer’s obligation to find alternative positions for the employees. Employers should thus be extremely cautious regarding the implementation of their reclassification scheme in the context of an economic dismissal. Proper dealing with such issue is at least as important as that of the reasons given for the dismissal itself since the sanction for disregarding the reclassification obligation is the same as that for unfair dismissal.