Can a dismissal letter be signed by an individual belonging to a holding entity?

Dismissal procedures are highly regulated in France including with respect to the identity of the individual who is entitled to conduct the procedure and sign the dismissal letter; such person must -by definition- be the “employer” .  However, some flexibility has been introduced over the years by French case law, and a recent decision of 13 June 2018 of the French Supreme Court is an illustration of such flexibility.

In this decision, the French Supreme Court held that a dismissal letter could be validly signed by the general manager of the holding entity, which is not the employing entity.

As explained above, the general principle is that  the dismissal procedure can only be carried out by, and the dismissal letter can only be signed by, the “employer”, who is the legal representative of the employing entity.  Alternatively, the “employer” can delegate its power to terminate the employment of the company’s staff to another individual.  However, French case law has held that such delegation of power may only be granted to an individual who actually belongs to the employing entity, and prohibits delegations or mandates granted to individuals external to the company.

Such prohibition may appear particularly strict in an economic context in which more and more entities are part of groups and in which there are daily intermingling with other entities of the group not only in the conduct of their activities but also regarding human resources management.

This is why, as an exception to the abovementioned rule, French case law had already admitted a few years ago that the Human Resources Manager recruited by the holding entity was validly entitled to effect the dismissal of the employees of the French subsidiary.  The rationale behind this decision was that the Human Resources Manager of the group was not external to the French entity given his/her duties were by essence extended to the management of the personnel of the subsidiaries of the holding entity.

Since that time, some other decisions have also authorized individuals who did not belong to the employing entity to dismiss the employees of the French subsidiary: this has been the case for example of the president of the holding entity and of the manager and the deputy general manager of the holding entity. Here also, it seems that the reasoning of the court was linked to the fact that the holding entity, through such individuals, was involved in the activity of the French subsidiary.

In the decision in question, the general manager of the French subsidiary was dismissed for gross misconduct and the dismissal letter was signed by the general manager of the parent entity.  The employee claimed that under such circumstances, his dismissal should be held unfair since the signatory was external to the employing entity and had not been granted any written delegation of power.  The Supreme Court rejected these arguments and held that the general manager of the parent, who had habitually supervised the employee’s activity, could as a result not be considered as being external to the French subsidiary. Moreover, the court added that in such case, the dismissal was valid even though no written delegation of power had been issued (a principle which had also been recalled in previous decisions).

In this context, although French case law has been widening the scope of the individuals who are entitled to handle a dismissal procedure within a group of companies,  we believe its terms are not sufficiently general at this stage to create a general principle in this respect.  We are therefore of the view that in practice it may still be preferable whenever practically achievable to have the dismissal procedure handled directly by the employing entity.