In French law, since 2017, the amount of damages for unfair dismissal is set according to a minimum and maximum scale set by law. According to article L. 1235-3 of the Labor Code, if a dismissal is considered to be without real and serious cause, the judges can propose the reinstatement of the employee or condemn the employer to pay damages for unfair dismissal.
Prior to 2017, there was no cap on the amount of damages for wrongful dismissal. A minimum amount is set by law, which is 6 months’ salary for employees made redundant after at least 2 years of seniority and employed in a company with at least 11 employees. It was very difficult for employers to know precisely their exposure to the risk of litigation. Depending on local Labor Court practices, the wrongful dismissal damages benchmark based on similar cases can sometimes double or triple.
Apart from a few cases of possible nullity of dismissals, the application of the Macron scale is not subject to any exceptions. The Court of Cassation has confirmed the opposability of one of the major legal provisions aimed at securing the risks linked to labor disputes for the benefit of all employers in France.
The introduction of Macron’s scale
Employers were not sure that President Macron and his government had resolved the situation by adopting Decree No. 2017-1387 of September 22, 2017 on the predictability and security of labor relations. It revised the terms of Article L. 1235-3 of the Labor Code and set a maximum ceiling for all unfair dismissal compensation (known as the Macron scale).
The Macron scale aims to facilitate the settlement of disputes. The search for an amicable resolution is now framed within the limit set by article L. 1235-3 of the Labor Code. In other words, if an employer dismisses an employee without real and serious cause, the company will know in advance the maximum exposure to the risk of litigation with the maximum ceiling of damages for unfair dismissal set by law.
This new regulation has been very controversial and has been the subject of strong resistance from French courts because it limits the discretion of judges. The scale is designed on the basis of the employee’s seniority alone, without taking into account the individual’s personal situation, such as age, ability to find a job, any personal difficulties (disability, being a single parent).
Two key cases
On May 11, 2022, the Court of Cassation (Court of Cassation) put an end to the legal vagueness around the Macron scale linked to damages for unfair dismissal. In two decisions, the Court of Cassation decided that the Macron scale was in accordance with Convention No. 158 of the International Labor Organization (ILO), confirming the position taken in its two opinions dated July 17, 2019.
In the first case of May 11, 2022 (RG n° 21-14.490), an employee with four years’ seniority and dismissed for economic reasons was awarded 32,000 EUR, i.e. nine months’ salary, as damages and interest for unfair dismissal. The maximum amount provided for by law is five months’ salary. The Court of Appeal estimated that the application of Macron’s scale would lead to the awarding of a sum barely equal to half of the damage suffered in terms of reduced financial resources. Therefore, the Court of Appeal concluded that the Macron scale did not allow adequate and appropriate compensation for the damage suffered by the employee given his particular situation, since he was 53 years old at the time of the dismissal. The Court of Appeal found that the Macron scale was not compatible with the legal requirements set out in Article 10 of ILO Convention No. 158. This provision provides for the payment of “adequate compensation or any other form of reparation deemed appropriate” in the event of unjustified or abusive dismissal.
The Court of Cassation rejected this argument and ruled that the judges of the Court of Appeal should have assessed the particular situation of the employee to determine the amount of damages due between the minimum and maximum amounts set by law and as determined by article L. 1235 -3 of the labor code.
In the second case of May 11, 2022 (RG n° 21-15.247), an employee with 37 years of seniority and dismissed for economic reasons contested the amount of 48,000 euros which had been awarded to her as damages for dismissal abusive corresponding to the maximum of the Macron scale (i.e. 20 months of salary). In this case, the claimant considered that Article L. 1235-3 of the French Labor Code was contrary to Article 24 of the European Social Charter. This provision specifies that “with a view to ensuring the effective exercise of the right to protection in the event of dismissal, the parties undertake to recognize (…) the right of workers dismissed without just cause to adequate compensation or any other appropriate remedy. ”
The Court of Cassation therefore had to rule on the question of the direct effect of Article 24 of the European Social Charter in French domestic law. Unsurprisingly, the Court of Cassation rejected this direct effect, considering that this provision could not lead to the exclusion of the application of the provisions of article L. 1235-3 of the Labor Code. The Court of Cassation confirmed that the employee should be granted compensation set at an amount between the minimum and maximum amounts determined by the Labor Code.
The Court of Cassation underlined the fact that “the European Social Charter is based on a programmatic logic: it requires Member States to translate the objectives set for them into their national legislation” and that “monitoring of compliance with this Charter is entrusted to the European Committee of social rights Rights (ECSR) alone. Consequently, “although complaints can be brought before this body, its referral is not jurisdictional: the decisions it takes are not binding under French law”.
With regard to compliance with ILO Convention No. 158, in both cases the Court of Cassation was asked to determine whether French law provided for “appropriate” compensation in the event of unfair dismissal of employees and more specifically whether the Macron scale met this objective.
To justify its answer, the Court of Cassation specifies that the scale does not apply in the event of nullity of the dismissal because:
- violation of a right to fundamental freedom
- acts of moral or sexual harassment or discriminatory dismissal
- dismissal following legal action in matters of professional equality between women and men or the denunciation of crimes and misdemeanors
- dismissal of a protected employee because of the exercise of his mandate
- the dismissal of an employee in violation of the protections relating to pregnancy and maternity, paternity leave, adoption leave, parental leave and periods of suspension due to a work accident or occupational disease
The French Court of Cassation also pointed out that the judge can order reimbursement by the employer to the French unemployment agency (Employment center) all or part of the unemployment benefits paid to dismissed employees, from the day of their dismissal until the day of judgment, within the limit of six months of unemployment benefits per employee.
Consequently, “taking into account the margin of appreciation left to the Member States and all the penalties provided for by French law in the event of ‘unfair dismissal’, the Court of Cassation considers that Macron’s scale is compatible with Article 10 of ILO Convention No. 158.