What happens a firm’s internal regulations following a TUPE transfer ?

Under French employment law, the application of TUPE regulations triggers specific consequences not only with regard to an employee’s employment contract, which is transferred automatically by operation of law, but also on the employees’ collective status.

In this respect, a recent decision of the French Supreme Court has specified what happens to a company’s internal regulations (règlement intérieur) in the event of a TUPE transfer.

It should be recalled that the promulgation of internal regulations is compulsory in companies employing at least 20 employees and the purpose of such document is to cover specific topics, essentially health and safety rules, discipline and rules applicable to sexual and moral harassment.  In addition to such compulsory topics, any policies implemented internally within companies the breach of which may lead to disciplinary sanctions also requires the specific procedure of internal regulations to be followed.

Until such recent decision, in the case of a TUPE transfer, as the law was silent on the subject, a company’s internal regulations were considered as following the regime applicable more generally to any unilateral undertakings and were automatically transferred to the new employing entity.

In a recent decision of 17th October 2018, the French Supreme Court held for the first time, in a situation in which employees were transferred to a newly incorporated entity, that such entity could not apply the internal regulations of the initial employing entity and that such document was no longer enforceable against the transferred employees.  In so deciding, the Supreme Court considered that a company’s internal regulations are a document of a specific nature, i.e., a regulatory document which cannot be assimilated to other unilateral undertakings of the employer.

On this basis, the Supreme Court held that in the case of a TUPE transfer, the internal regulations do not transfer to the new employing entity and that it is up to the new employing entity to implement its own internal regulations following the transfer.

Although the Supreme Court did not deal with this topic, this decision raises the more general question of the transfer of company policies when TUPE regulations apply. Logically, it would appear to be the case that for those policies which have been implemented under the same procedure as internal regulations, the decision would also be relevant and that the new employing entity would be required to reiterate them after the transfer in order for the policies to continue to apply.  But what about other policies? Until further clarity is obtained on the issue and to be on a safe side, it may be prudent to reiterate them as well after the transfer.