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

Event
Formation EFB Navacelle - Session 3/10
23 November 2023
Defining the scope of the internal investigation: internal investigation sources and the investigation plan
EFB Degree - Internal investigation (3/10) What criteria need to be considered when deciding whether to carry out an internal...
Publication
ABA International Law Section
21 November 2023
Practical tips when dealing with corruption allegations in arbitration
Navacelle contributes to the American Bar Association International Arbitration Committee's Quarterly Newsletter (Q3 2023).
Press review
Press review Navacelle
17 November 2023
Press review – Week of 13 November 2023
This week, the press review looks back at the criminal proceedings against Bashar Al-Assad, leader of Syria, Gotabaya Rajapaksa, former...
Publication
Revue Justice Actualités #28
13 November 2023
Internal Investigation and Negotiated Justice (in French)
Can internal investigation be used to negotiate the investigation phase with prosecuting authorities? An article in French, by Guillaume Daieff, Stéphane...
Press review
20 October 2023
Press review – Week of 16 October 2023
This week, the press review looks back at the ECHR's decision on the conviction of Total and Vitol on charges...
Event
Cambridge Forum 2023 - Roma
19 October 2023
Corruption in International arbitration: Are allegations of corruption a way out of International arbitration claims?
Stéphane de Navacelle contributed to the Global Forum on Corporate Criminal Liability for Cambridge Forums on corruption allegations versus arbitral...
Event
EFB Degree - Internal investigation
19 October 2023
Internal investigation : Relationship between the lawyer-investigator and his client
EFB Degree - Internal investigation (2/10) How should attorney-client privilege be applied? What is the relationship with the client? What resources...
Press review
13 October 2023
Press review – Week of 9 October 2023
This week, the Navacelle press review looks back at the appeal conviction of the mayor of Sète, as well as...
Press review
Press review
6 October 2023
Press review – Week of 2 October 2023
This week, the Navacelle press review looks back at the search of the home of the former mayor of Saint-Jory...
Press review
Press review
29 September 2023
Press review – Week of 25 September 2023
This week, let's look back at the French Constitutional Council decision repealing an article of the French Criminal Procedure Code...
Press review
Press review
22 September 2023
Press review – Week of 18 September 2023
This week, the Navacelle press review looks back at the adoption of the eighth version of the European Administrative Cooperation...
Press review
press review
15 September 2023
Press review – Week of 11 September 2023
This week, the Navacelle press review looks back at the decision of a Brazilian Supreme Court judge to overturn the...