Analysis
14 July 2021

An illustration of the employer’s disciplinary power in case of non-compliance with internal company rules

Bastille Day Newsletter 2021 - Enforcement & Court Decisions

 

On 11 March 2021, the Court of Appeal of Angers issued an interesting decision on the consequences of a non-compliance with internal company procedures by an employee, ruling that did not constitute a serious misconduct but that such misconduct likely to give grounds for a real and serious cause for dismissal under French labor law[i].

I. The employee committed by not following the internal policies a fault of such a nature as to give a real and serious cause to his dismissal

In France, an employer can only dismiss an employee if he can prove a real and serious cause for such dismissal[ii], i.e., an objective cause which is sufficiently important to justify the termination of the employment contract[iii].

Serious cause for dismissal should not be confused with the notion of serious misconduct, which is defined by case law as facts constituting a breach of obligations resulting from the employment contract of such importance that they make it impossible for the employee to remain in the company[iv].

In the case at hand, a company dismissed its sales and marketing manager of an armament company for serious misconduct, on the grounds he had arranged a meeting to sign an international contract with a distributor based in the United Arab Emirates, without respecting the internal control procedure in force, which provided for an obligation to alert the management and due to the fact that the contract was not validated either in form or in substance, thus exposing the company and its managers to particularly high risks[v].

Whereas in the first instance, the court had considered that the dismissal was devoid of real and serious cause, the Court of Appeal of Angers, on the contrary, judged that the sales and marketing manager, with regard to his level of responsibility and the particular nature of the activity of the company, had committed by not going through the validation process, a fault of such a nature as to give a real and serious cause to the dismissal[vi].

But, on the other hand, the Court of Appeal considered that there was no reason to qualify the dismissal of serious misconduct since, even if the breach committed was a faulty abstention in view of the context, it did not reflect any bad faith or disloyalty on the part of the sales and marketing director and did not have the effect of putting the company in a situation of serious and immediate danger so that it was impossible to maintain his employment contract[vii].

II. An illustration of the exercise of the employer’s disciplinary power in case of breaches of internal policies

Beyond the employment law aspect of this decision, this decision has great consequences regarding the enforcement and execution of compliance requirements resulting from the law n°2016-1691 of 9 December 2016 on transparency, fight against corruption and modernization of economic life (called “Sapin 2” law) and it makes it an interesting decision for the fight against corruption.

Indeed, article 17 of this law requires, mainly companies with more than 500 employees and revenues of more than 100 million euros, to take measures to prevent and detect the commission of acts of corruption or influence peddling among which the establishment of a disciplinary system allowing the company’s employees to be sanctioned in the event of a violation of the company’s code of conduct[viii].

This decision is thus an illustration of the exercise of the employer’s disciplinary power in case of breaches of internal anti-corruption and influence peddling procedures. It is a reminder of the importance of the prevention system and the zero tolerance that should be applied in view of the risks incurred by companies, as the Court of Appeal underlines by specifying that the sales and marketing director committed “a clumsiness revealing a poor appreciation of the extent of his responsibilities which could have had unfortunate consequences for the company”[ix].

While some may regret that the judges did not find serious misconduct in the failure to comply with internal compliance procedures, the fact remains that the decision reflects an important consideration of the latter. In any event, this is the illustration that compliance requirements take an ever more important place.

Related content

Analysis
14 July 2021
Paris Court of Appeal highlights the growing importance of compliance in arbitration
Bastille Day Newsletter 2021 - Enforcement & Court Decisions
Publication
16 June 2021
Investigations: what future? (in French)
Stéphane de Navacelle and Julie Zorrilla discuss the future of investigations for Village de la Justice.
Stéphane de Navacelle
Managing partner Navacelle
Julie Zorrilla
Partner Navacelle
Podcast
7 June 2021
Amicus radio – Episode 5: Compliance and internal investigation – what future? (in French)
Reflections on the growing importance of compliance and internal investigation in business practice, their strengths and weaknesses, their challenges and future developme...
Podcast
31 May 2021
Amicus radio – Episode 4: The internal investigation cannot be invented.(in French)
The internal investigation is a process, it is therefore framed and composed of different stages which are always the same. Camille Potier, former member of the Bar Co...
Podcast
24 May 2021
Amicus radio – Episode 3: The internal investigation: what guarantee for everyone’s rights? (in French)
The internal investigation raises the eminently essential question of the guarantee of the rights of each party, whether it be the company on whose behalf the investigati...
Analysis
21 May 2021
White paper on Investigations in criminal matters (in French)
The practice of investigation by the lawyer has become an essential element of a new form of criminal defence in a context of negotiated justice.
Podcast
17 May 2021
Amicus radio – Episode 2: The recent consecration of internal investigation and compliance. (in French)
The practice of internal investigations in France was confirmed and enshrined in the Sapin II Act, which introduced the Judicial Agreement in the Public Interest (CJIP). ...
Podcast
10 May 2021
Amicus radio – Episode 1: The lawyer leads the investigation, the internal investigation! (in French)
The practice of internal investigation in criminal matters has gradually become established in France as a result of the prosecution of French companies by the US Departm...
Publication
8 March 2021
Navacelle co-authors GIR of the Practitioner’s Guide to Global Investigations – 5th edition
NAVACELLE co-authors the French chapter of the fifth edition of Global Investigations Review’s Practitioner’s Guide to Global Investigations.
Stéphane de Navacelle
Managing partner Navacelle
Julie Zorrilla
Partner Navacelle
Clémentine Duverne
Partner Navacelle
Publication
27 January 2021
Compliances Magazine – Internal criminal investigation fundamentals (in French)
Julie Zorrilla, Princessa Fouda and Sara Deyhim present the internal criminal investigation fundamentals for Compliances Magazine.
Julie Zorrilla
Partner Navacelle
Princessa Fouda
Lawyer
Sara Deyhim
Sciences Po student
News
18 December 2020
Investigations: Navacelle/FRA roundtable discussions (in French)
We are excited to announce the launch of a new initiative led by FRA and NAVACELLE bringing together French in-house and outside counsel investigations and compliance pro...
Publication
17 June 2020
Interview of Stéphane de Navacelle on the latest white-collar law developments in France in Observatoire de la Justice ...
Stéphane de Navacelle interviewed by the French Observatoire de la Justice Pénale on the latest news regarding white collar crime in France, “the present time white c...
Stéphane de Navacelle
Managing partner Navacelle