Under French employment law, there is a classic distinction between dismissals for “gross misconduct” (faute grave) and willful misconduct (faute lourde) regarding the consequences of such misconduct for the employee. Although in both cases the employee loses his/her entitlement to a notice period and to a dismissal indemnity, an employee dismissed for willful misconduct will also be deprived of his/her indemnity in lieu of paid leave for his/her rights to annual leave accrued but non taken at the time of dismissal.
The logic underlying such distinction can be found in the fact that the willful misconduct implies that the employee had the intention of causing actual harm to his/her employer, meaning that the deprivation of the employee’s right to his/her paid leave indemnity is considered as a penalty resulting from his/her malicious intent.
However, the justification for such rule has over time been considered as increasingly questionable as the employees’ right to actual rest and leave was simultaneously being interpreted as widely as possible by the French Supreme Court and the European Court of Justice.
In this context, and in a recent case, the Supreme Court referred to the Constitutional Council a question as to the constitutionality of such rule, such question having been raised by an employee, dismissed for willful misconduct, who argued that the deprivation of the indemnity in lieu of paid leave infringed his rights to health and to rest which are guaranteed by the French Constitution.
The Constitutional Council did find that the deprivation of the indemnity in lieu of paid leave was unconstitutional but based its reasoning on a different argument which was not raised by the employee. Instead, the Constitutional Council pointed to the fact that exemption of the payment of the paid leave indemnity in case of willful misconduct was not applicable to employers affiliated with a paid leave fund (which is particularly the case in the construction industry). In this context, the Constitutional Council held that such distinction between employers affiliated with a paid leave fund and those who were not was not justified and therefore ruled that this distinction shall be abolished. As a consequence, the Constitutional Council held that all employees should benefit from the more favourable provisions of the law, i.e., the benefit of the paid leave indemnity even in case of willful misconduct.
As a result, and as of 4th March 2016 (date of publication of the decision), any employee dismissed for willful misconduct continues to be entitled to his/her indemnity in lieu of paid leave. Even though there will as a result be less interest in being able to show that the employee’s misconduct constituted willful misconduct, employers should remain aware that such qualification is the only one which entitles an employer to seek the financial liability of his/her former employee.