Co-employment disputes in France: economic dominance over a distributor is not co-employment
Cass. soc., 9 October 2024, n° 23-10.488
Co-employment disputes in France: French Supreme Court confirms that economic dominance over a third-party distributor does not necessarily lead to co-employment.
Since a landmark 2020 ruling, the French Supreme Court has established that co-employment may arise in two cases:
when a de facto employee-employer relationship exists between the employee and co-employer, meaning that in practice, the co-employer exercises authority to direct, control and sanction the employee; or
when the co-employer permanently interferes with the employer's economic and social management, resulting in a complete loss of the employer's autonomy.
A recent ruling illustrates that even a commercial contract with particularly stringent terms and conditions imposed on a weaker, economically dominated party does not automatically establish co-employment (9 October 2024, no. 23-10.488):
The case involved La Française des Jeux (FDJ), a French company holding a monopoly over certain gambling games. In brief, FDJ used intermediaries to distribute its products to local retailers. Former employees of these distributors, after being made redundant by their respective employers, sought damages, claiming that FDJ was their co-employer due to its permanent interference in their employers' operations.
Specifically, the employees alleged that:
the intermediaries conducted their activities using resources provided by FDJ (e.g., vehicles, IT software and hardware, FDJ-branded materials);
FDJ delivered the training for the intermediaries' employees;
the intermediaries were required to work exclusively for FDJ;
the intermediaries had to follow strict directives issued by FDJ;
FDJ closely monitored the intermediaries' activities and level of performance; and
some of the economic dismissals were caused by new commercial arrangements between FDJ and the intermediaries.
The French Supreme Court rejected these arguments, emphasizing that while the distributors were subject to "close commercial ties" and a "contractually defined commercial policy", these conditions arose from freely agreed commercial relations with FDJ.
The French Supreme Court reminded that the economic dominance of one company over another does not equate to co-employment, provided such dominance does not lead to permanent interference with the employer's economic and social management, leading to a total loss of autonomy. In this case, FDJ and the distributors had no shared managers and FDJ had no say in the distributors' recruitment, dismissal, remuneration, benefits and career progression policies. Moreover, the contractual documentation clearly stated that the distributor remained in charge of personnel management. The ruling also highlighted that one of the intermediaries was free to reorganize its operations without any interference from FDJ, demonstrating that it remained in the driver's seat when it came to organizational and management decisions.