France: Consultation on Strategic Orientations Ordered

By Cécile Martin September 4, 2019
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France: Consultation on Strategic Orientations Ordered

​In France, an employer with more than 50 employees consults its works council or its economic and social committee annually on "the strategic orientations of the company defined by the body in charge of the administration or supervision of the company."

The employer also consults its works council or its economic and social committee on matters concerning the organization, management and general running of the company, and prior to any measure likely to affect the volume or structure of its workforce.

Some economic and social committees and unions claim that consultation on the strategic orientations is a necessary precondition for consultation on a specific measure that implements these orientations. Consequently, they argue, if it does not mention a particular project during its information-consultation on strategic orientations, the employer would not be able to engage in information-consultation on said project, such as layoffs or a transfer of shares.

In a judgment handed down July 11, the Nanterre High Court ordered a company to suspend its information-consultation with works councils on a project of sale of its shares, pending a consultation on the 2019 strategic orientations.

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The recent decision is slightly different from that adopted by the Nanterre High Court in a judgment of May 28, 2018. In this earlier matter, the Nanterre High Court had ordered the suspension of an information-consultation procedure regarding a projected sale pending the completion of consultation on strategic orientations, which was then ongoing.

By contrast, a judgment by the Paris Court of Appeal on May 3, 2018, took a different stand.

The court of appeal held that "consultation on strategic guidelines is independent from any consultation on a specific project," so that the annual consultation of the economic and social committee on strategic guidelines does not constitute a prerequisite for consultation on a reorganization project. The court of appeal specified: "it is not established [that there has been misuse of power] since the failure to implement an information-consultation procedure on strategic guidelines prior to consultation on the project ... a one-off reorganization project, does not constitute a violation of the rights and prerogatives granted to the works council."

The scope of the judgment recently rendered by the Nanterre High Court should be put into perspective, since it only justifies the suspension of the project in view of "the scale of the sale project," specifying that "the project was necessarily known to the employer at the time of the consultation on the strategic orientations for the year 2018."

Higher courts—and namely the Court of Cassation (one of the French Supreme Courts), provided this case or a similar one is appealed—will be required to weigh in on the ongoing debate on whether consultation with works councils on strategic orientations is a prerequisite for consultation on specific measures.

Cécile Martin is an attorney with Ogletree Deakins in Paris.

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