Employment Law Watch - UK case law update

It has been a busy few weeks with several new interesting employment cases being reported – here is a quick round up of a few that caught our eye: 

There is yet another warning to employers on the importance of getting that contract drafting just right, as Blackburn Rovers found out to their cost (that cost being £2.25 million). And victimisation has been a hot topic in the last few weeks – we look at three new important victimisation cases below. 

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Employment Law Watch - UK case law roundup

Today we take a brief look at a couple of interesting employment law cases from the last two weeks: Anderson v London Fire and Emergency Planning Authority  shows us how not to draft a pay review clause, and HM Land Registry v McGlue looks at when aggravated damages in discrimination cases might be appropriate.

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France: Code of Conduct compliance breach is not automatically a sufficient reason for employee termination - Employers should be cautious of a 'right' local implementation of compliance guidelines

Our Global Regulatory Enforcement colleague Daniel Kadar wrote a blog post discussing the French Supreme Court's (‘Cour de cassation’) ruling over a case that should remind any international organization that the worldwide adoption of compliance guidelines and of a Code of Conduct is not in itself a sufficient protection against compliance breaches: everything depends on how these tools are implemented locally.

To read the entire blog post, please click here.

New challenges for global groups with French operations

This post was written by Nicolas Sauvage

De-industrialization is the hot theme of the presidential campaign, regardless of the political spectrum. Solutions brought forward by candidates are more or less concrete, more or less likely. They show little if any understanding of how globalization has made the world a village, through internet and its ability to give instant access to comparative data and decide to move business to welcoming countries.

But in the backyard of their courts, Appeal judges have silently elaborated what can be qualified as the dismissal visa. No more pay off of employees unfairly made redundant. Now the key question is to know whether the judges will authorize a French or foreign group to shut down a plant, downsize staff or disinvest or will merely tell them to keep their workers on the payroll.

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Joint-employment - A new challenge for international groups established in France

U.S. employers with French operations must focus carefully on their investment or divestment operations. Through the " joint employer theory " employees of a French company can now pierce its corporate veil to hold the ultimate parent, even one based in the United States, liable for restructuring costs, including severance packages and damages for unfair dismissal.

Nicolas Sauvage's following presentation gives you the crucial aspects on this French distinctive feature:  "A New Challenge for International Groups Established in France"

Defending Employers Against Corporate Veil Piercing and Tiptoeing Out of France

U.S. employers with French operations must focus carefully on their investments or divestment operations. Through the “joint employer theory,” employees of a French company can now pierce its corporate veil to hold the ultimate parent, even one based in the United States, liable for restructuring costs, including severance packages and damages for unfair dismissal.

The French Supreme Court has set forth three cumulative criteria for a foreign company to be judged a joint employer (Jungheinrich 18 January 2011), and as a result sentenced to pay French personnel liabilities:

  • A common management (e.g., someone from the U.S. parent company board catapulted into the chairman position of the French subsidiary)
  • A direct or indirect majority stake in the French subsidiary
  • A common business carried out by the parent and the subsidiary (obvious notion in an industrial group, but that has been extended to portfolio management for holdings or private equity funds)

It creates a great concern for private equity funds where "top-down" and hands-on control on companies in portfolio is embedded in the business model. So it is for international group holdings. Alas, this is the new battlefield for French employees of U.S. companies.

"Better be a living rat than a dead lion" is the moral of the second breathtaking case (Dunlop Goodyear 1st February 2011): Shutting down a business in France will not be a legitimate reason for massive layoffs. 

  • First, when a parent company is deemed to be a joint employer - as in the Jungheinrich case - it must itself bring evidence that not only in France but also at the U.S. level, the criteria meriting a French layoff are met (i.e., economic difficulties, technological change, need to salvage the competitiveness of the business line which is threatened on its own market throughout the world).
  • And second, because even without the joint employer situation, the Dunlop case tells us that even though the French facilities are incurring losses or seeing their profits decreasing, the judges will scrutinize the company’s overall profitability, to bless or curse the concerned reorganization. Because a French company is undergoing huge losses does not mean anymore carte blanche for laying off everyone.

Anticipation will now – more than ever – be critically important. No step can be taken by the foreign parent company to please the banks (refinancing the subsidiary), or the French authorities or local works councils and unions (directly paying the layoffs costs), without a very careful analysis of the consequences. Tiptoeing out of France will be far more efficient and cheaper than roaring at judges and unions.

Non-Discrimination, Diversity: a booster for ROI

Benefits of diversity and costs of discrimination have a direct financial impact on companies, beyond human and social fields.

The consequences of this impact are significant: they may be negative (litigation and related costs, penalty for breach of duties/quotas) or positive (aid for the hiring of various categories of people, increased productivity and economic benefits linked with HR impacts).

This conference aims at identifying the issues, risks and good practices to be implemented in order to increase company performance and profits.

With a special focus on the main concerns of Human Resources Directors and Diversity managers.

 

PROGRAM :

What are employers’ obligations in terms of non-discrimination and diversity issues ? What are the risks?

  • What are the new legislations and case law?
  • What happens in other countries?
  • How to avoid the windfall effect?
  • How to convince CFOs that diversity increases profits?

 

WITH THE SPECIAL PARTICIPATION OF :

Didier Dumont, Secretary General of Goodwill Management, author of the renown study : “Diversité du capital humain et performance économique de l’entreprise”, first study proving the evidence of economic benefits of diversity on businesses.

Bruce Roch, Director of Innovation and Diversity at Adecco France, who will testify of experiences and actual results on companies.

Nicolas C. Sauvage, Partner at Reed Smith LLP, will present legal aspects promoting diversity and penalizing discrimination and back this up with crucial experiences of day-to-day situations.

 

WHEN:

Friday, January 28, 2011
Starting from 8:30 am (welcome reception)
Beginning of the conference 9:00 am until 12:00 pm

 

ADDRESS: 
CENTRE DES VICTOIRES
52, rue de la victoire
75009 PARIS

Attendees will pay a limited fee (150€) to attend the whole morning conference.

 

For more information, or to register for this event, please contact:

Michaël Hayat
Tel : + 33 1.44.30.49.64
Email:  mhayat@syntec-numerique.fr

Recent Discrimination Rulings - Potential Risks for Global Employers

This post was written by Nicolas C. Sauvage and Michaela L. Mc Cormack.

On November 2, Nicolas C. Sauvage gave a seminar at top French business school HEC as part of the new specialized executive Masters programme for international Human Resources Directors, “Human Resources Management & Sustainable Development.” 

Nicolas’ presentation covered the themes of diversity and discrimination, retracing the emergence in both European and international texts of important ideas such as direct and indirect discrimination, discriminatory harassment, and showing that the idea that diversity and non-discrimination are central to economic growth has been a constant theme of these texts. 

A series of court rulings from various EU states and central jurisdictions were employed to help trace the development of case law in the area, thus highlighting the rules and boundaries that must be respected by HR directors and general management at every stage, from recruitment to the termination of the employment contract. 

Comparisons were made with the United States in order to explore the progression of contentious discrimination matters and to study the pros and cons of positive discrimination/ affirmative action, a particularly topical and somewhat controversial issue in Europe at the moment. Over the past few years, legislation in France has installed a series of requirements concerning quotas and/or salary for disabled workers, “senior” workers and women. Positive discrimination is also an important theme in the UK’s newly enacted Equality Act 2010.

The final section dealt with the business risks and advantages related to discrimination and diversity. Besides the various legal and financial risks surrounding litigation, examples were used to illustrate the stakes regarding the image of a company, in terms of both clients and talent. The executives present at the seminar were reminded of the central place of discrimination and diversity within other HR and management issues, such as IT and Internet policies, psychosocial risks, and questions of work-life balance. 

Practical advice was given on steps that can be taken (such as management training; review of recruitment, evaluation and promotion policies; focus on social dialogue; and involvement in outreach and community projects), to instill best practices within a company to improve its position in terms of diversity. Finally, besides the general benefits attached to a diverse workforce, the tangible competitive and financial advantages of these diversity policies, such as the fact that the achievement of a diversity label is now often part of the criteria for calls for tender, were presented. 

In these times of responsible consumerism and changing expectations on the part of job candidates, non-discrimination and diversity were shown to be a central part of any company’s policy for sustainable development, holding an important place in the growing search for a triple bottom line: “People, Planet and Profit.”

Please download the slides here to read Nicolas’ presentation.

Reed Smith Employment Attorney Expands Social Media Advice to France in New Edition of White Paper

Nearly everyone has become a part of the social media phenomenon that includes Facebook, Twitter, MySpace and other websites. The growth of social media has been staggering. However, along with that growth comes new legal risks, including employment issues, which we haven't seen before.

As you may know, in fall 2009, we published a social media white paper on United States law entitled:  Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon. As a result of the overwhelming response that we received from clients and colleagues around the globe, we published a second edition of the white paper in spring 2010 that included a chapter on employment practices that may arise from the use of social media in the United States and Europe.

We continue to receive overwhelming interest in social media issues relating to employment; therefore, we recently released a third edition of the white paper that addresses employment issues that could arise in France.

Click here for the new edition, and please bookmark the webpage to be sure to receive ongoing revisions to the white paper.