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.

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