Economic dismissals: how to establish a threat to the company's competitiveness?
Conseil d'État, 11 February 2026, n° 497016
Economic dismissals: how to establish the existence of a threat to the company's competitiveness?
A reorganization of the company necessary to safeguard its competitiveness may constitute a ground for economic dismissal within the meaning of Article L. 1233-3 of the French Labor Code.
It must still be established that there is a genuine threat to the company's competitiveness.
Where the company belongs to a group, this threat is assessed at the level of the business sector to which it belongs within the group.
The Conseil d'État specifies that this threat may be characterized along, in particular, two lines:
1. The foreseeable deterioration of the company's competitive position within its business sector.
In practice, to build such a ground for dismissal, the employer could, in my view, consider, for example:
intensifying competition, in particular through the entry of new players;
a foreseeable erosion of market share;
a structural misalignment of the business model (cost structure, productivity, organization) compared with more efficient competitors;
the existence of lasting or hard-to-reverse competitive disadvantages (technological lag, limited investment capacity, obsolete industrial equipment);
etc.
2. The foreseeable deterioration of that same business sector, regardless of the company's relative position.
In this perspective, the analysis could, in my view, focus, for example, on:
macroeconomic developments affecting demand (a structural decline in volumes, a change in habits or consumption patterns, etc.);
exogenous cost shocks (raw materials, energy, supply chain, etc.);
new or strengthened regulatory constraints weighing on the activity or its profitability;
the impacts of a deteriorated geopolitical environment;
etc.
The Conseil d'État confirms that the threat may be characterized along one or other of these lines, without their having to be established cumulatively.