Client alert: the French Supreme Court validates the “Macron Grid” which caps damages awarded to employees in cases of unfair dismissal
July 25, 2019
Authored by: Sarah Delon-Bouquet and Emmanuelle Mercier
In two opinions dated July 17, 2019, the French Supreme Court confirmed that the so-called “Macron Grid” implemented by the French employment law reforms in September 2017 is compatible with Article 10 of Convention no. 158 of the International Labor Organization (“ILO”).
Following diverging opinions and judgments from local French labor courts (e.g., Montpellier, Troyes, Lyon) on the validity of the Macron Grid, the French Supreme Court has received a request for its opinion from the Louviers and Toulouse labor courts to determine whether such Macron Grid is compatible with international laws.
The Macron Grid (codified under Article L. 1235-3 of the French Labor Code) establishes a scale that applies to the determination by French judges of the compensation granted for unfair dismissal. It sets a minimum and a maximum amount based on the employee’s seniority and average gross salary: the minimum amount is one month’s salary for one year of service (0.5 months for companies with less than 11 employees); the maximum is twenty months’ salary for employees who have at least 29 years of service. Note that this grid does not apply if employees claim that their dismissal results from discrimination or harassment and they hence request that their dismissal be declared null and void.
Certain labor courts have considered that the Macron Grid violates Article 10 of Convention no. 158 of the International Labor Organization (“ILO”) which provides that if judges rule that termination is unjustified, “they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate”.
The French Supreme Court in its opinions considered that the term “adequate” should be interpreted as reserving the right for States that are parties to the ILO to have a degree of discretion in determining the level of compensation in case of unfair dismissal. Thus, the Macron Grid which sets a minimum and a maximum amount complies with the ILO Convention insofar as it results from the French State’s discretion to so determine the level of compensation.
These opinions from the French Supreme Court provide for more legal certainty following numerous labor courts decisions having questioned the validity of the Macron Grid. However, labor courts are not bound by these opinions; only a decision on the merits would have res judicata. On July 22, 2019, the Grenoble labor court ruled against the Supreme Court opinions and granted damages beyond the Macron Grid. Note that the Paris and Reims Court of Appeals are due to render appeal decisions on September 25th. It will be interesting to see the outcome of these appeals. Stay tuned …
Bryan Cave Leighton Paisner LLP has a team of knowledgeable lawyers and other professionals prepared to help employers address French employment laws. If you or your organization would like more information on this or any other employment issue, please contact an attorney in the Employment and Labor practice group.