The internal regulations of the absorbed company are not enforceable against the new employer

In a decision dated March 31, 2021, the French Supreme Court held that the internal regulations (“règlement intérieur”) applicable in a company which has been merged into another one no longer apply to the transferred employees.

In the case put to the French Supreme Court, an employee who had initially been hired by a company later to merge into another company and who had therefore been transferred to that other company was dismissed by his new employer. The employer challenged his dismissal. He argued in particular that his new employer had not complied with the disciplinary procedure provided for in the internal regulations applicable with his initial employer.

The French Supreme Court refused to follow the employee’s argument and clearly considered that, in case of mergers, the internal regulations are not transferred with the employment contracts.

This decision complements a previous decision of the French Supreme Court which considered that the new employer could not call for the application of the internal regulations applicable with the initial employer to discipline a transferred employee (Cass. soc., October 17, 2018, n° 17-16.465).

As a reminder, the French Labour Code provides that where a change in the legal situation of the employer occurs, in particular as a result of a sale of the company, all employment contracts in force continue with the transferee (art. L. 1224-1 of the French Labour Code). Conversely, according to this French case law, the internal regulations previously applicable with the transferor company do not follow the transferred employees and are, then, not enforceable against the transferee, i.e., the new employer.

Cass. soc., March 31, 2021, n° 19-12.289

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