Take care when drafting the economic ground in the dismissal letter
Cass. soc., 15 April 2026, n° 24-21.280
Beware of loosely drafted economic grounds for dismissal!
In this case, the dismissal letter stated that the employee's dismissal on economic grounds "is justified by the fact that, following the termination of our business relationship with our main client Léo Burnett, we are experiencing a very sharp decline in our activity. This will continue and will result in the sale of our business. This ground led us to eliminate your art buyer position."
The concept of "economic difficulties" therefore did not clearly appear, and the cessation of business was presented only as a future prospect.
The court of appeal had nonetheless upheld the dismissal. On the one hand, it found the existence of "economic difficulties" within the meaning of Article L. 1233-3 of the French Labor Code, noting:
revenue of €0 in 2018, €104,591 in 2017 and €463,899 in 2016;
a net result of €77,020 in 2017 (kept positive only thanks to a settlement indemnity received by the employer, the operating result being in deficit that year) and of -€59,143 in 2016;
"the reality of very strong economic dependence" of the employer on its sole client.
On the other hand, it found that "the cessation of all activity is established by the fact that, as at 30 April 2017, it no longer employed any staff" (the dismissal had taken place on 11 April 2017).
The French Supreme Court nonetheless quashes the ruling: the dismissal letter did not refer to one of the economic grounds provided for by Article L. 1233-3 of the French Labor Code, since it mentioned "neither economic difficulties, which do not result from stating the loss of the company's main client and a very sharp decline in its activity", "nor a definitive cessation of the company's business".
A strict solution, but consistent with the French Supreme Court's prior case law.
Employers wishing to avoid this kind of pitfall may usefully refer to the model dismissal letters provided for by Decree no. 2017-1820: "State precisely and objectively the economic reasons (i.e. either economic difficulties, or a reorganization of the company necessary to safeguard its competitiveness, or technological changes, or the cessation of the company's business)."
Sources: French Supreme Court, 15 April 2026, appeal n° 24-21.280 / Versailles Court of Appeal, 11 September 2024, n° 23/03431