TUPE transfers in France: key reminders from recent French Supreme Court rulings
Cass. soc., 11 September 2024, n° 22-19.370 & 22-23.882
TUPE transfers in France: key reminders from recent French Supreme Court rulings
Under French employment law, employees automatically transfer to a new employer in case of transfer and continuation of a so-called "autonomous economic entity", defined as an "organized set of persons and tangible or intangible assets working towards a specific economic goal".
But how can we determine whether an autonomous economic entity has actually been transferred, triggering the automatic transfer of employees?
According to case law, such transfer occurs if another operator acquires significant tangible or intangible assets that are essential for the operations of the autonomous economic entity.
Such transfer of assets can happen:
Directly: for example, when a company re-internalizes previously outsourced activities, or in the framework of M&A transactions (asset deal).
Indirectly: typically, when assets are transferred between two third parties (e.g. when switching subcontractors).
Here are two recent and insightful examples from the French Supreme Court:
Direct transfer of significant assets: Company A, an aircraft cleaning company operating in Orly and Roissy Charles de Gaulle airports, decided to re-internalize activities previously handled by a subcontractor, Company B.
The Paris Court of Appeal, upheld by the French Supreme Court, ruled that Company B's employees should transfer to Company A, as Company A continued Company B's activities (toward the same, sole client: Air France) and took over significant assets essential to those operations, including:
the certifications and authorizations used by Company B for its airports operations;
the infrastructure used by Company B;
the airstrip installations used by Company B; and
the premises formerly used by Company B.
(11 September 2024, no. 22-19.370)
Worth noting: Company B claimed that other non-significant assets (vehicles, office furniture, badge reader etc.) should also transfer to Company A. However, the Paris Court of Appeal rejected this claim, clarifying that the transfer of assets is a condition for the application of French TUPE regulations, not a consequence of it (i.e. the transfer of employees).
Indirect transfer of significant assets: The city of Saint-Malo decided to discontinue its contract with Non-profit A, which ran a music school, and partner with Non-profit B, which continued the same activities. Likewise, the court ruled that the music teachers initially employed by Non-profit A should automatically transfer to Non-profit B, in particular because Saint-Malo had transferred significant assets previously used by Non-profit A to Non-profit B, including public funding, equipment, premises (regardless of whether they were the exact same premises), while Non-profit B kept serving the same clientele.