Lack of reinstatement entitles an expatriated employee to the payment of his salary by the parent company until his dismissal

In a case dated October 14, 2020 (n°19-12.275), the French Supreme Court defines the obligations of the parent company in case of dismissal of an employee by a foreign subsidiary.

In this case an employee worked in 2011 for a French company as Sales Director.

Later in April 2011, he worked as Sales Director in Canada before being recruited as Sales Director in an American subsidiary which dismissed him in April 2013.

Following his dismissal by the American subsidiary, the French parent company proposed to this employee to be reinstated as Sales Manager.

In August 2013, the parent company dismissed the employee, blaming him for unjustified absence.

In this decision, the French Supreme Court recalls the parent company’s repatriation and reinstatement obligation towards the dismissed employee and rules on the consequences in case of non-compliance.

• The parent company has a repatriation and reinstatement obligation towards the employee who has been dismissed by a foreign subsidiary

According to Article L.1231-5 of the French Labour Code, when an employee hired by a parent company has been sent to a foreign subsidiary and an employment contract has been concluded with the latter, the parent company must ensure his repatriation in case of dismissal by the subsidiary and provide him with a new job compatible with the importance if his previous role.

Case-law considers that said reinstatement obligation is fulfilled when the parent company makes an offer to the employee which is “serious, precise and suitable with his previous duties within the parent company”.

• In case of non-compliance, the parent company is subject to financial sanctions

French Supreme Court considers that non-compliance entails the employee to the payment of his salary until his “second” dismissal (i.e. the dismissal by the French parent company). The Supreme Court indicates that the salary to be paid is the one perceived by the employee while working abroad, not the salary paid when he was working for the parent company.

If the French parent company does not respect its obligation, the “second” dismissal of the employee is deemed to be unfair. In that case, the employee is also entitled to the payment of damages, which are calculated on the basis of his last foreign salary.